The town in the video stressed using locally made goods instead of imported goods. How could using locally made goods lower CO2 emissions?

It reduces the need to import goods

Explanation:

When you buy locally, the products you buy don't come from far away, so they don't have to cross the country (or the ocean) by boat, plane or trucks to reach the market/store where you're buying, at least not from a long distance away.

The distance a vehicle travels, the less CO2 emissions it produces.

If the good you're buying is made/produced only an hour away, that's not much pollution produced compared as if the good has to come from a distant place spending days on highways to reach you.