Here's how it works.
Phone X is in city Y
All calls made to places in city Y are local.
All calls received while in city Y are local.
Phone X leaves city Y, enters city Z
All calls made to places in city Z are local.
All calls made to places in city Y and anywhere else are long distance
All calls received while phone is in city Z are long distance.
Phone X and phone S are from city Y, but for the moment in city Z
No matter who calls who, phone X and S are charged long distance.
Phone X is in city Y, Phone S is in city Z, originally from city Y.
Phone X calls phone S, local call. Phone S is charged long distance.
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