my() creates a lexical variable that is local to the block it's in. If you declare my $foo;and call function my_function(), my_function() will not have access to $foo.

local() on the other hand, creates a variable that is local to the current block, and blocks it calls. so my_function() will be able to get at $foo, if you declare it local $foo;

There is more to it than this, but it's a start.

--4c6966653a205468652073656172636820666f
  7220746861742070657266656374204765656b
  20436869632c20746865206f6e652077697468
  2074686520737061726b6c696e672065796573
  2077686f20706c617973206973207261696e2e

my() variables aren't stored in the symbol table; local() variables are stored in the symbol table, in the sense that they give "local values to global (package) variables."

From perlsub:

    In general, you should be using ``my'' instead
    of ``local'', because it's faster and safer.
    Exceptions to this include the global punctuation
    variables, filehandles and formats, and direct
    manipulation of the Perl symbol table itself.
    Format variables often use ``local'' though, as
    do other variables whose current value must be
    visible to called subroutines.
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The main reason to be aware of namespaces is that you cannot have two things of the same type with the same name in the same namespace, but you can do that if they are in different namespaces. For example, each package in Perl defines a new namespace, which is why different packages can have variables with the same name and not have them conflict with each other. In perl, the fully qualified name of a variable or a subroutine is given by prepending its package name separated by two colons. So for example, if both packages A and B define a variable v, they are actually two different variables, with the full names $A::v and $B::v.

Even variables that you do not declare to be in any package are by default in the "mother of all packages", main. So when you write "$x=10;" perl really sees it as

$main::x=10;
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Since everything is based off of main, the examples above can also be written as:

$main::A::v
and
$main::B::v
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(Both ways are 'correct', although the previous way is actually preferred.)

Unless you are creating your own packages, you don't have to worry about namespace or about using the double colon identifier - perl does all of that behind your back. But it is a nice feeling to know that perl is back there, keeping track of everything for you. :)