If I want to export data from onDemand to a locally hosted instance of JIRA does the export include custom workflows and schemes as well as the issues & projects?
Yes, the backup will contain your issues, projects, workflows and schemes. You can regard that as a normal JIRA XML backup that you can generate from a local, standalone JIRA instance.
Note that data exports from OnDemand will only be provided in the case that you are cancelling the OnDemand service - see http://confluence.atlassian.com/display/AOD/About+Your+Data for more information.
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