Hello there @itamarbenez! Have you checked to see if you have any anti-virus or security in place that could be blocking Local? There are some more details on a similar thread here: Uh-oh! Could not update hosts file | Unable to Grant Admin Permission - #6 by Mud
Specifically, you may want to try going to Local > Preferences > Advanced > Router Mode and switching it to LocalHost. More details about this troubleshooting here: What is Router Mode? - Local