If you have a function that declares anything and returns a pointer to it, it's undefined behavior. Because variables have block scope.
Variables have block scope, but storage duration need not. If you return a pointer to a block of memory allocated within a function, that is not undefined behaviour. If you return a pointer an array declared within the function that is (if you return a pointer to a static array declared within a function that is not). That's the contrast I was trying to point out.