If I download a .gem file to a folder in my computer, can I install it later using gem install?
If you want to work on a locally modified fork of a gem, the best way to do so is
gem 'pry', path: './pry'
in a Gemfile.
... where ./pry would be the clone of your repository. Simply run bundle install once, and any changes in the gem sources you make are immediately reflected. With gem install pry/pry.gem, the sources are still moved into GEM_PATH and you'll always have to run both bundle gem pry and gem update to test.