Have to be careful about reading overmuch into local byes, but it is notable that for Labour the patterns recently have not exactly been those suggested by media HOT TAKES.
Yes the Lib Dems were gaining seats in local by-elections all the way up to the last general election. Lib Dem supporters, well known for being hyper-optimistic, claimed this was evidence they were going to do much better than expected at the general election. We all know how that turned out...
Local by elections are also usually pathetically low turnout so results in them can never be extrapolated to national politics. Plus the Lib Dems put more effort into local by elections than any other party so often just turning out their core vote is good enough to win with abysmal turnout.
