Microsoft recommended using .local for active directory domains since the 1990s, I think because back then it was not reasonable to demand that their customers register a domain name at a time when that was a massive hassle. But it was still wrong to squat on a TLD: there were already moves to expand the number of TLDs at the time, but MS were very slow to correct their mistake.

Then Apple made the same mistake with Bonjour / mDNS, and the IETF standardized Apple’s use of .local and it all became an even worse mess.