Yes, that is essential! The address-type “local” does not indicate “a local network address” but only “addresses that are local to the router”, i.e. one of the addresses appearing in IP->Addresses. Without considering their subnet mask.
It would be nice when there was an address list feature that automatically populates an address list with “all locally connected subnets” (similar to it being nice when you could insert routes for those in secondary routing tables), but there isn’t, and you have to populate that manually and not forget to update that when you add another VLAN.
You also need to get rid of that l7 matching rule. It does not make sense, and it loads the CPU.