Tell me about FilteringEnabled?

Well, you can damage an enemy, but it will be local only, i.e. only the player damaging the enemy can see their health go down. Even if the enemy dies on the player's screen, it will not affect the server in any way (Considering that the 'enemy' is another player). For example:

--LocalScript

local UserInputService = game:GetService('UserInputService')

local function OnInput(Input, gameProcessed)

	if Input.KeyCode == Enum.KeyCode.Insert then

		for _, v in ipairs(game.Players:GetChildren()) do

			if v.Character:FindFirstChildOfClass('Humanoid') then

				v.Character.Humanoid:TakeDamage(25)

			end

		end 

	end	

end

UserInputService.InputBegan:Connect(OnInput)

Now, the code above will kill players local to the player who used it, but on the screen of the player and on the server, nothing will change. That's why they're called LocalScripts. But, if you design your code like mine, you can kill others and it will appear on their screen that they are being damaged as well:

--LocalScript

local UserInputService = game:GetService('UserInputService')

local ReplicatedStorage = game:GetService('ReplicatedStorage')

local InputService = ReplicatedStorage:WaitForChild('InputService') --InputService is a RemoteEvent

local function OnInput(Input, gameProcessed)

	if Input.KeyCode == Enum.KeyCode.Insert then
	
		InputService:FireServer()

	end

end

UserInputService.InputBegan:Connect(OnInput)

--ServerScript

local ReplicatedStorage = game:GetService('ReplicatedStorage')

local Playes = game:GetService('Players')

local InputService = Instance.new('RemoteEvent', ReplicatedStorage)

InputService.Name = 'InputService'

local function OnInputEvent()

	for _, v in ipairs(game.Players:GetChildren()) do

		if v.Character:FindFirstChildOfClass('Humanoid') then

			v.Character.Humanoid:TakeDamage(25)

		end

	end

end

InputService.OnServerEvent:Connect(OnInputEvent)

Now, THIS is the ideal code if you want other players to notice that they are being damaged. RemoteEvents and RemoteFunctions are the most important part of making a game which is compatible with FilteringEnabled. So, always use them if you want the client to communicate with the server.

Now, as I previously said, you can animate your character using LocalScripts, but they actually replicate, so no problems. The real problem starts when you use Lerp() to animate a player (using welds). If so, then good luck to you. It NEVER works. You NEED to animate the player on the server (if using Lerp()), or else, the arms will just break off if you do it on a LocalScript.

Also, you don't need two accounts or computers to test your game. You can publish it to Roblox and then ask a friend to help you test your game, or just go and start your own Local Server in Studio by going to Test > Start. You can set the amount of clients you want to have in the server. All the clients are controlled by you on different windows.

Anyways, hope this answer helped. Just ask me if you ever want some help, I'd be glad to. Have a great day ahead!