Local port forwarding forwards traffic coming to a local port to a specified remote port. For example, all traffic coming to port 1234 on the client could be forwarded to port 23 on the server (host).
Note: The value of localhost is resolved after the Secure Shell connection has been established - so when defining local forwarding (outgoing tunnels), localhost refers to the server (remote host computer) you have connected to.
Remote port forwarding does the opposite: it forwards traffic coming to a remote port to a specified local port. For example, all traffic coming to port 1234 on the server (host) could be forwarded to port 23 on the client (localhost).
It is important to realize that if you have three hosts, client, sshdserver, and appserver, and you forward the traffic coming to the client's port x to the appserver's port y, only the connection between the client and sshdserver will be secured.
