It is important to understand that a dataset in DSS is essentially just a "pointer" to the underlying table. So if your underlying data or table is in S3 or a SQL database, then the data will remain in said datastore and DSS will not "copy" the data locally. If DSS then uses this dataset (as an input or output of a recipe for example), then DSS will connect to it and read or write to it accordingly.
The only way that a dataset is created locally typically is if you do something like create a managed filesystem or Upload files dataset. I hope that this helps but you may also find our DSS concepts documentation helpful as well.