Its value is a function:
Its value is ‘outline-level’
Function of no args to compute a header’s nesting level in an outline.
It can assume point is at the beginning of a header line and that the match
data reflects the ‘outline-regexp’.
The function can do anything it wants, so such settings are inherently unsafe. Of course, if you are setting it to a value that you control, you can verify that the function is benign and mark it as safe. But only you can do that for your setup: there is no way for somebody else to make sure of that.
As the OP points out in a comment below, the variable is always risky, not only when it is specified as a file local variable. And as @Drew points out, the point of the warning when it is specified as a file-local variable is to make sure that the user is alerted to the potential risk. If there were no warning, then the change would go into effect silently.