Suppose that you connect to the same autonomous system at two separate locations in your network. One connection is a DS3 whereas the other is a DS1. You would naturally prefer to send the majority of your traffic to your peer via the DS3 connection rather than the DS1 connection. Because BGP has no knowledge of the bandwidth of the connections in your network, you must tell the routers that you would prefer to route traffic to the networks that you learn from that peer over the DS3 rather than the DS1.
This preference, or policy, can be applied to the routes you learn from the peer on the router that the BGP peering session is configured on. Using a route-map to set the local preference, you implement your policy in your autonomous system. By setting the local preference higher on the routes that are learned from the peer on the router that the DS3 terminates on, rather than the routes learned from the peer on the router that the DS1 terminates on, you make the DS3 the preferred path to the peer.
From Cisco Router Configuration and Troubleshooting, Second Edition, by Mark Tripod, published by New Riders, Indianapolis, Ind. For more information on Cisco Router Configuration and Troubleshooting, go to http://www.newriders.com/books/title.cfm?id=644 and https://www.informit.com/product/0735700249/.