The list you create with "new" in the first version is simply discarded when you make the assignment. Assigning to a Java variable in Java always completely discards any existing value without affecting it in any way. In this first version, you end up with localList pointing to the exact same List that object.getAList() returned -- meaning that if "object" still has a reference to that List, code in "object" could modify that list, and the changed would be visible via localList, and vice-versa, because they reference the same object.
In the second version, the elements of "object"'s list are put into a new list. Now either object can chnage their own list independently, without affecting the other one.
The soul is dyed the color of its thoughts. Think only on those things that are in line with your principles and can bear the light of day. The content of your character is your choice. Day by day, what you do is who you become. Your integrity is your destiny - it is the light that guides your way. - Heraclitus