Developing a site on localhost; how should I send emails
Use Mailgun API to send emails. It is free(10K emails/month) for basic usage and testing purposes. Also have a look at Mandrill, I haven't tried this yet. But it is from Mailchimp and looks promising. It is also have a free plan (12K emails/month).
Hope this helps :)
You can configure your CI site to use an SMTP server (gmail, etc).
Just use your personal email account, or create a new email account for the web site. See http://ellislab.com/codeigniter/user-guide/libraries/email.html for more info.