Local IP works (already used this for a week) but you have to fill in the IP and port accordingly. This must be an issue with how the dedicated server or DCS client works, I don't know if this is a new issue with the current version or if this has never worked before. Would still be nice if you can just use the server browser and favorites to connect to locally hosted servers. Also would like to note that others connecting from the internet do not experience any issues connecting to the same servers.
