The real issue is preemption. State law preempts local law. It's a tool, and thus value-neutral. Preemption has also been used to prevent cities from setting up municipal WiFi. Comcast bought the state legislature. Bad. In this case, preemption appears to be used to create a "right to rent". Good if you want to rent. Bad if you don't like people coming and going in your neighborhood.
Preemption at the state level means that if the law doesn't suit you, you must chose another state or live with it. Since leaving Indiana is not an option for many of the people who will find this undesirable (namely, people who find short-term rentals in their neighborhood to be a nuisance), I find myself leaning against this.
IMHO, preemption should generally only be used when municipal governments are "mis-behaving" in ways that would cause problems to the state as a whole. e.g., cities generally aren't allowed to license drivers as it would just annoy the hell out of anybody moving within the state. OTOH, cities are generally allowed to license businesses and Airbnb fits that pattern. So does WiFi. We ought to have a right to municipal WiFi... but a lot of places don't.