I'm not sure comparison is in order in this instance, by virtue of the age old apples vs. oranges adage. By my understanding Locallist position themselves as a "local-only social bookmarking" service, where as Locality does not provide user accounts/interation at this stage. I believe choice in the sector, though, is ultimately beneficial to the consumer at the end of the day. Is it not something we strive for on a daily basis, with regards to choice, and competition, in telecommunications and broadband access in the country?
Perhaps you should rather compare both sites to an institution such as Google, which is far more capable than either, yet fails to provide filtering of locally hosted content. As such, I believe building upon the shoulders of giants is the best approach, in providing overlays for sites such as Google and (the locally accessible)
Live Search.