Build local-first AI agents that run entirely on a developer workstation with Microsoft Foundry Local and Qwen function-calling models. Covers Small Language Models (SLMs), the OpenAI-compatible local endpoint, sandboxed local tools, local RAG with Chroma, local MCP servers, hybrid cloud/local routing, and the privacy/cost/offline trade-offs. Based on Lesson 17 of AI Agents for Beginners. USE FOR: run an agent locally, offline agent, on-device agent, Foundry Local, Qwen function calling, local tool calling, local RAG, Chroma vector database, local MCP server, privacy-preserving agent, hybrid local and cloud agent, small language model agent, engineering assistant on my machine. DO NOT USE FOR: deploying agents to the cloud at scale (use deploying-scalable-agents / Lesson 16), building your first agent concept (Lesson 01), Foundry (cloud) hosted agents, GPU cluster / server-side inference provisioning.