Wordpress Permalink 404 Error

Hey guys iv been working with Wordpress a lot and yesterday iv ran into a problem that got me stuck. I think iv fixed it but I still want to ask anyways and make sure. So im developing locally on MAMP and made a folder name called "My Website" installed Wordpress and what not. Then I made a simple Sample Page and saw that the permalink on top of the URL looked like gibberish after the slash, so I switched the permalink settings to read the "post name" and when I did that I could not view any of my pages instead I got my 404 Error Message and it only worked when I went back to the default permalink settings. So I searched around and read a lot about changing my htaccess and all these other techniques. But I thought to myself out of all the Wordpress websites I have developed I never had to do any other configuration after switching the permalink settings to post name. So I kept looking and saw that my URL read the space in between my websites name as http://localhost/My%20Website/ ... At first I did not think the space in between my domain name mattered in local development but then I changed my folder name in sites folder and took out that space and went in general settings and took out the space there and it worked.

So now the question is why did it not let me use a space in my domain name while developing "Locally"? And was that a permanent fix? Never really ran into a permalink problem so some explanation on this would be helpful.