“getline” is for executing a command in a subshell and storing the result in a variable. “localtime” in this case. Then $1=localtime overrides the first column in the output so print can show the modified log line.
The only problem is that you need to redirect the error stream to the standard output. Otherwise error messages would not be read by awk (or any process in the pipe). So if you want to separate the streams, you would need to write a more complicated solution