I appears that this section is incorrectly including a local package, but not installing it as a local package.
Note that tests is properly installed earlier in the code (using editable mode) so the line in question is not required.

This came up during some troubleshooting in Google's library python-bigquery-sqlalchemy
In the noxfile.py for python-bigquery-sqlalchemy under the variable SYSTEM_TEST_EXTRAS we include only one item: [tests]

In the session.install() function calls in the prerelease_deps function, we install tests in editable mode from a local package. But we then attempt to reinstall the same local package without using the local editable mode, it results in a test failure. I will be submitting a PR to remove the SYSTEM_TEST_EXTRAS line.

    session.install("-e", ".[all, tests, tracing]")
    unit_deps_all = UNIT_TEST_STANDARD_DEPENDENCIES + UNIT_TEST_EXTERNAL_DEPENDENCIES
    session.install(*unit_deps_all)
    system_deps_all = (
        SYSTEM_TEST_STANDARD_DEPENDENCIES
        + SYSTEM_TEST_EXTERNAL_DEPENDENCIES
        + SYSTEM_TEST_EXTRAS

https://github.com/googleapis/synthtool/blob/71a4369253ed12bd4138f8fc68dc8d54b52fe736/synthtool/gcp/templates/python_library/noxfile.py.j2#LL418C9-L418C9