1620s, "fact of having a place," from French localité (16c.), from Late Latin localitatem (nominative localitas) "locality" (as a quality of bodies), from localis "belonging to a place, pertaining to a place," from Latin locus "a place, spot" (see locus). Meaning "a geographical place or district" is from 1830.
1530s, "locality where mining is carried on," verbal noun from dig (v.). Diggings, colloquial for "lodgings, quarters" is by 1838.
1816, false spelling of local in a sense "a place, a locality, a scene," especially with reference to circumstances connected with it, from this sense in French local, noun use of local (adj.), from Latin locus "a place" (see locus). The English spelling with -e probably is based on morale and intended to indicate stress.
The word's right to exist depends upon the question whether the two indispensable words locality & scene give all the shades of meaning required, or whether something intermediate is useful. [Fowler]