Would you expect https to be required on localhost? You gain very little (or nothing?) by doing it, but you do lose by adding complexity. Especially since you can't get let's encrypt to automatically issue a widely trusted certificate for localhost.
You don't need let's encrypt for a dev environment, you can use something like https://github.com/FiloSottile/mkcert and run Caddy locally to reverse proxy to whatever you need for development.
