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https://steamcommunity.com/sharedfiles/filedetails/?id=1550292479
If you use the 'Connections' tab you can see which buildings are importing and exporting.
Warehouses will fill from whatever is the quickest whether that's locally or imported.
The idea is that the producer puts it in the nearby warehouse, and the truck can return quickly. Then a bunch of the resource can be shipped to other warehouses in one go instead of all those individual trucks taking stuff. That final warehouse can then serve the requests for the local things with less delay.
But you might need a mod like this one to make the game actually *use* the warehouses reliably:
https://steamcommunity.com/sharedfiles/filedetails/?id=2804719780
If I need money, and I am not producing so much that I jam the roads and rails up, or buildings start complaining about not enough goods, then I set to Empty. Generally when you get going with your industry, my preference is to have them on balanced most of the time.
Hope that helps.