Please refer to below code:

public class Test {
    public static void main(String[] args) {
        class LocalCls {
            @interface TestAnnot {}
        }
    }
}

As per assertion "It is a compile-time error if an annotation declaration is nested within the body of a local class or interface declaration (14.3), or within the body of an anonymous class (15.9.5).", the above code should result in error. However, no compilation error is thrown.

[1] http://cr.openjdk.java.net/~gbierman/8246771/8246771-20200928/specs/local-statics-jls.html , see section: "9.6 Annotation Interfaces"