As far as I understand it, locality in physics is the statement that interactions can only occur between physical objects if the spacetime interval separating them is null or time-like. Thus, if the two events $(t,\mathbf{x})$ and $(t',\mathbf{y})$ occur simultaneously, i.e. $t=t'$, one cannot affect the other (unless $\mathbf{x}=\mathbf{y}$) as they will be separated by a space-like interval.
From reading notes on QFT however I have gathered that a physical theory is local if interactions between the quantum fields (contained in the theory) occur at the same point in spacetime. Why is this so, why can't they be time-like separated?
Is it because theories in QFT are described by Lagrangian densities $\mathscr{L}(\phi (x),(\partial_{\mu}\phi) (x))$ which describe the physics at each spacetime point and as the action $S$ of the theory is the integral of $\mathscr{L}$ over spacetime $$S=\int d^{4}x\mathscr{L}=\int dt\int d^{3}x\mathscr{L}(\phi (t,\mathbf{x}),(\partial_{\mu}\phi) (t,\mathbf{x}))$$ the interactions occur at the same point in time and thus for locality to be obeyed the fields must interact at the same spatial point also (as simultaneous events in which $\mathbf{x}\neq\mathbf{y}$ are always separated by a space-like path)?