Which instrument indicates height above sea level when set to the local setting?

The altimeter is the instrument that indicates height above sea level when it is set to the local setting, which is often referred to as the altimeter setting or QNH. When pilots adjust the altimeter to the current local barometric pressure, it allows the altimeter to display the aircraft's altitude relative to sea level accurately. This setting is crucial, especially in various weather conditions and topography, ensuring that aircraft maintain safe altitude levels above the ground and obstacles.

In contrast, the vertical speed indicator (VSI) measures the rate of climb or descent, rather than absolute altitude. The airspeed indicator measures the speed of the aircraft relative to the surrounding air, not altitude. The attitude indicator provides information about the orientation of the aircraft concerning the horizon but does not indicate altitude. Hence, the unique function of the altimeter for determining altitude makes it the correct answer.