Variables and locals: when to use each in Terraform configurations

Developers overuse variable blocks for values that are internal derivations, cluttering the module interface and forcing callers to supply redundant arguments. Alternatively, they hard-code derived values instead of using locals, making the code brittle.

Use variable for values that callers must or may provide (external interface). Use locals for computed or derived values that are internal to the module and should not be overridden by callers.

variable "environment" {
  type = string
}

variable "project" {
  type = string
}

locals {
  name_prefix    = "${var.project}-${var.environment}"
  common_tags    = {
    Project     = var.project
    Environment = var.environment
    ManagedBy   = "terraform"
  }
  is_production  = var.environment == "prod"
}

resource "aws_instance" "web" {
  tags = local.common_tags
}

locals are computed once and reused, reducing repetition and making global changes (like a tag structure) a single-line edit. They also hide complexity from the module caller.

Designing Terraform modules with a clear internal vs external interface