All LCD's use a layer of plastic that diffuses the light, thus spreading it across the panel.
Look at an ordinary frosted light bulb vs. a clear light bulb: you can see the filament inside the clear bulb but in the frosted bulb the entire bulb surface lights up as the frosted coating diffuses the light across its surface.
Set that are fully backlit, have the LED's spaced across the entire panel, not just along the edge. Each individual LED can then be brightened and dimmed, hence the term "local dimming". This allows for higher contrast levels and more even light diffusion.
