Is the landline just for having a company monitor stuff? Should it still work locally just to like set off an alarm if the door open or motion is detected when the system is active?

Yeah, it’s just for remote monitoring. But if it’s not connected, it will probably always show communication errors on the panel above. Sometimes you can get away with using a telephone line emulator like a Magic Jack (sometimes not, it’s hit or miss).

I rented a place that had a slightly newer honeywell/ademco system (that was no longer in use) and was able to get it running locally with a Magic Jack. I programmed my cell as the monitoring company. So if it went off, I would get a call from that # and know it was an alarm. The downside to that was it keep calling over, and over, and over. Making it difficult for you to call the police (found that out the hard way).