I am developing a website which uses the Facebook login. Now, I want to be able to get this to work both in my production environment, as well as in my development environme
Update: As of 2018 the path to this setting is now Products > Facebook Login > Settings > Client OAuth Settings the rest of this answer is still valid.
There is a better way. You just need to add valid callback URL's for your localhost to Settings > Advanced > OAuth Settings.

This method allows you still have your production website URL while allowing oauth from dev, staging, production, etc.