Data locations are important because they change how assignments behave:
assignments between storage and memory and also to a state variable (even
from other state variables) always create an independent copy. Assignments
to local storage variables only assign a reference though, and this
reference always points to the state variable even if the latter is changed
in the meantime. On the other hand, assignments from a memory stored
reference type to another memory-stored reference type do not create a copy

pragma solidity ^0.4.0;
contract C {
uint state_variable; // same as global storage variable

function test() returns uint{
    uint local_variable = 10; //same as local storage variable
    return local_variable * state_variable;
}
}