My guess would be that it is using your local database (as it can’t access OSMs database directly), but the map shown uses the tiles from tile.osm.org which obviously show the data in the main osm database. If you open Potlatch, or user the Databrowser, you should see the data in your local database.

If you do want to see map tiles showing your local database content, you will need to set up a tile server in addition to the Rails_port server. Have a look at Mapnik / mod_tile / renderd on the wiki for some ideas of how to set up the rendering part.