I'm reading this paper on Machine Learning explainability, which talks about the LIME algorithm on page 2.
To explain the LIME algorithm, it gives an overview of its objective function:
In their description of the function, they say that $\pi_{x'}$ is a "local kernel", I've underlined this in red.
If you read the LIME paper, on page 3, in section 3.2, they say that $\pi_{x'}$ is a proximity measure, which tells you how close a point $z'$ is to the point $x'$.
This makes intuitive sense to me, as $\pi_{x'}$ is used as a weighting for the objective function. But I don't understand how that makes $\pi_{x'}$ a "local kernel".
I understand the kernel of a matrix to be its null space, but that doesn't seem appropriate here. What does a local kernel mean in this situation?

If you continue reading the first paper you linked, on page 5, they discuss $\pi_{x'}$ again and describe it as a weighting kernel. Keep this in mind.
Next consider the first desirable property that they establish for SHAP-like models:
Remember that $\pi_{x'}$ is fed directly into a loss function $L$, which is given by:
$$ L(f, g, \pi_{x'})$$
where $f$ is your original model, and $g$ is your "explanation model". $L$ calculates the difference between the predictions of $f$ and $g$ and records it as a loss.
This is where $\pi_{x'}$ comes in. $\pi_{x'}$ is similar to a matrix's kernel. It's an equation for sample weights that ensures the loss function, $L$, becomes zero when you feed in the sample $x'$.
That's where the term "local kernel" comes from. The equation, $\pi_{x'}$, is local to the sample $x'$, it ensures that the difference at $x'$ is zero, but it doesn't ensure that the difference is zero for every other sample.
For example, if I have two samples $x_1'$ and $x_2'$, and the corresponding kernels $\pi_{x_1'}$, $\pi_{x_2'}$, then $L(f, g, \pi_{x_1'}) = 0$ at $x_1'$, but it is not necessarily equal to zero at $x_2'$.
A general definition could be derived from the kernel of function, which is the set of inputs that a function sends to $0$. A function's kernel does this for all cases, but a "local kernel" only does this around a specific locality.