Here's the relevant part from the documentation: https://codeberg.org/rimu/pyfedi/src/branch/main/INSTALL.md
PieFed recommends at least 4GB of RAM and 2 CPU cores and to double that for more than 10 users. And that's with federation enabled. If you don't federate and only have a few local users, I suppose there isn't much to do for the database, so you'll get away with less network and CPU usage.
Not sure about running it locally, but I'm sure someone will chime in. Maybe just set Federation to "Allowlist" and don't put anything in, so nothing is allowed.