This controls how messages to the room from local users are dealt with. WARN can be set on or off. You can set one of the other three options. WARN controls what the sender sees while the other options control what the recipient sees.
CENSOR - Replace the offending text with asterisks
DROP - Block the entire message
NONE - Perform no profanity filtering
WARN - Send a warning to the sender
/as help filter channel local <topic>
You should generally set warn on unless you have local set to none. Otherwise the sender will not know that the message contained offensive text.