Haole, in the Hawaiian language, means "foreign" or "foreigner"; it can be used in reference to people, plants, and animals. It is also used in Hawaiian Pidgin to mean "white" or "Caucasian." Haole is a highly charged word and can be used descriptively or derisively.
In Hawaiian pidgin, local is usually considered the opposite of haole. Local is an omnibus term for any non-white raised in Hawaii, encompassing Hawaiians, part-Hawaiians, Japanese, Japanese-Hawaiians, Chinese, Chinese-Hawaiians, etc. The antonymy reflects a long history of race and class conflict in the Hawaiian islands, in which the upper class (plantation and business owners, professionals) tended to be haole and the working class was local. Hence the descendants of Portuguese imported for plantation work are usually considered local, even though in other parts of the United States they would be considered "white".
Some people say that it makes sense to speak of local haoles -- haoles who have grown up in Hawaii and speak pidgin. Others would say that the term 'local haole' is nonsense. Another term used is kamaāina haole, or 'child-of-the-land' haole. Anyone born and brought up in Hawaii can be a kamaāina.
These various shades of meaning could be debated at length. Malihinis (newcomers) should be careful using such nuanced words.
A common popular etymology claims that the word is derived from "hāole", literally meaning "no breath". Foreigners did not know or use the honi, a Polynesian/Hawaiian greeting by sniffing the cheeks of the face, and so they were described as "breathless". The implication is that haoles are aloof and ignorant of local ways - a common stereotype in Hawaii. Linguists believe that this etymology is erroneous, however, for these reasons:
There are no alternate theories of the origin of the word haole. Other Polynesian languages, such as Tongan and Samoan, use the word pālangi or papālangi.