Microsoft made it discouraging to do this but not impossible.
When you must sign in, there's a button saying: Login with your Live account
When you click it, there will be a button called Register live account
. If you click this, at the bottom, there will be a link saying Create local account instead
.
Using this way, you will create a local account. Additionally, if you already registered an account and logged in with it, you can go to PC Settings
, User accounts
and choose to switch to Local account
, which will create a local account based on the current logged in account. This is a useful technique to store your settings into a live account and quickly apply them after a new installation. Login with the live account once, then switch back to a local account.