When I am filling the App settings my local URL is not permitted to be includes like a Website URL
Unfortunately, that URL format is not supported. If you’re doing this for testing purposes, I recommend using a service like Ngrok to create a local tunnel. You’ll get a web interface URL (for your local tunnel), and a forwarding https:// URL (which you can use in the Website URL field). Check it out here
Thanks for the answer. Please update your documentation.
The problem is not really related to the callback URL so I don’t think the documentation requires updating. The website url is public facing giving information about your app, so simply provide a public facing URL about where people should contact the developer of the app. This doesn’t interfere with callback and authentication, and the loopback URL is definitely not appropriate to enter in this field.