Let $X,Y$ be connected Riemannian manifolds, and suppose $f:X \to Y$ preserves lengths of paths ($f$ is an arcwise isometry). I don't assume anything about the regularity of $f$.
Is it true that $$ \lim_{y \to x} \frac{d^Y(f(x),f(y))}{d^X(x,y)}=1 \text{ for all } x \in X ?\tag{1}$$
Edit: I am not sure that the limit $(1)$ needs to exist at all even when $f$ is an arcwise isometry. I give an example in an answer below where $$ \liminf_{y \to x} \frac{d^Y(f(x),f(y))}{d^X(x,y)}<1.$$
However, I am not sure what happens if the limit does exist. Is it possible that in that case the limit always equals $1$?
(In high dimensional settings the existence of a limit is "rare"- if $f$ is differentiable at $x$, than probably all the singular values of $df_x$ should be $1$).
What happens for the special case where $\dim X=\dim Y$?
(I suspect that when $\dim X < \dim Y$ there might be much shorter paths in $Y$, that won't be realized as images of paths in $X$ (via $f$), since in $Y$ there is "more room" than in $X$, but I am not sure how to construct an example).
(1) ${\rm dim}\ X< {\rm dim}\ Y$ : Consider a unit speed curve $$ f: [0,l]\rightarrow \mathbb{E}^2,\ f(0)=p_0,\ f(l)=O,\ p_n=(0,\frac{1}{2^{n} } ),\ O:=(0,0)$$
Consider a unit speed curve $f_0$ in $B(O,|p_0|)$ and out $B(O,|p_1|)$ s.t. it is shortest curve satisfying the following $$ f_0(0)=p_0,\ f_0(l_0)=p_1,\ f_0(t)=(0,-|p_1|)$$ for some $0<t<l_0$ where $l_0$ is length of $f_0$.
Then $$ \pi < {\rm length}\ f_0 <2\pi $$
Define $g_0$ to be line segment $[p_0p_1]$
Also define scalings $$f_n:= \frac{1}{4^n} f_0,\ g_n=\frac{1}{4^n} g_0$$
Finally $$ f=\bigcup_{i=0}^\infty\ f_n\cup g_n $$ where $l$ is sum of lengths of $f_n,\ g_n$.
Hence if $X=f([0,l]),\ Y=\mathbb{E}^2$, then $$ \frac{|O-p_{2n}|}{{\rm length}\ f_n} < \frac{ \frac{1}{4^n} }{ \pi \frac{1}{4^n} } < 1 $$
(2) ${\rm dim}\ X= {\rm dim}\ Y$ : $B$ is closed unit ball in $\mathbb{R}^m$ Assume that $f: B\rightarrow \mathbb{R}^m$ is a path isometry. That is $f$ is short.
If $N_i$ is $\epsilon_i$-net for $B$, assume that $f_i=f$ on $N_i$. Then there is piecewise distance preserving $F_i$ which is extension of $f_i$ (cf. Brehm's theorem).
Hence it is claimed that $f$ is uniform limit of $F_i$ :
For $x$ there is $y\in N_i $ s.t. $|x-y|<\epsilon_i$ So $$|f(x)-F_i(x)| \leq |f(x)-f(y)|+|f(y)-F_i(y)| \leq \epsilon_i $$
Note that $F_i$ satisfies the condition in OP except measure $0$ set so that so does $f$.