rc denotes "run-control",
The multiuser runlevel would be defined as the level at which networking is available and thus connections to the server could be made using those services in lieu of hard-wired console connections.
Mind you, servers are generally managed by a service processor (under various names) which do support network connections and in turn act as if you indeed had a hard-wired console.
As for the rc.local file, this is a convenience to allow you to specify all of the "local" (site-specific) objects (daemons and/or once-at-boot scripts) you want to start. You may choose to use this paradigm or actually populate '/etc/init.d' with start/stop scripts, appropriately.