The way I do themes for localhost is:
go to the extend repository in my browser and download to my download folder
unzip and copy the theme's folders/files to my localhost theme folder
start localhost server
use browser to go to localhost and log in
activate the theme
If I need to tweak it, I work on the files in the localhost theme's folder keeping the original download for backup so I don't need to download it again.
I almost exclusively do edits in notepad++ not the ACP edit panel. I imagine it works OK, but I'm more comfortable working in notepad++
And I almost exclusively work with files through my browser and FTP not the WordPress auto install/update feature. I guess it does work OK, just that I'm old fashioned or something.
WordPress has a lot of features that are great for non-techy types, but I know how to do things "the hard way" and don't mind doing things in ways that others might think take more effort than needed.