The link [[w:de:Foo]] on enwiki used to be equivalent to [[:de:Foo]] (i.e. it was treated as an in-text interwiki link).
But, now that "w" has been correctly marked as a local interwiki for enwiki (bug 954), [[w:de:Foo]] is treated as [[de:Foo]] (i.e. it appears in the sidebar).
I think this behaviour is wrong. When you consider the use-case of cross-wiki code reuse (copy/paste, import, scary transclusion), you would expect [[w:de:Foo]] to appear consistently on all wikis as a regular interwiki link. It's confusing to have it appear in the sidebar on some wikis and not others.
It makes intuitive sense to always treat [[localiw:langcode:Foo]] as if it was [[:langcode:Foo]].