python dictionary passed as an input to a function acts like a global in that function rather than a local

I am very confused by the behaviour below. Cases 1, 3, and 4 perform as I would expect, but case 2 does not. Why does case 2 allow the function to change the value of the dictionary entry globally, even though the dictionary is never returned by the function? A main reason I am using functions is to isolate everything in the function from the rest of the code, but this does not seem to be possible if I choose to use the same variable names inside of the function. I was under the understanding that anything explicitly defined in a function is local to that function, but this does not seem to be the case if the dictionary is defined and passed as an input to the function.

Python 2.7.2+ (default, Oct  4 2011, 20:06:09) 
[GCC 4.6.1] on linux2
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=============Case 1===============

>>> def testfun1(a):
...     a=2
... 
>>> a=0
>>> testfun1(a)
>>> a
0

=============Case 2===============

>>> def testfun2(b):
...     b['test']=2
... 
>>> b={}
>>> testfun2(b)
>>> b
{'test': 2}

=============Case 3===============

>>> def testfun3():
...     c=2
... 
>>> c=0
>>> testfun3()
>>> c
0

=============Case 4=============== (explained by this question: Global dictionaries don't need keyword global to modify them?)

>>> def testfun4():
...     d['test']=10
... 
>>> d={}
>>> testfun4()
>>> d
{'test': 10}

Python's "parameter evaluation strategy" acts a bit different than the languages you're probably used to. Instead of having explicit call by value and call by reference semantics, python has call by sharing. You are essentially always passing the object itself, and the object's mutability determines whether or not it can be modified. Lists and Dicts are mutable objects. Numbers, Strings, and Tuples are not.

You are passing the dictionary to the function, not a copy. Thus when you modify it, you are also modifying the original copy.

To avoid this, you should first copy the dictionary before calling the function, or from within the function (passing the dictionary to the dict function should do it, i.e. testfun4(dict(d)) and defining the function as def testfun4(d):).

To support what @Casey Kuball said, every object in Python is passed by reference. Each function receives a reference to the actual object you passed. Modifying these objects depends on whether they are mutable data types.

In essence, one can say that mutable objects like dictionaries, sets, and lists are passed by reference. Immutable objects like int, str, tuple are passed by value.

You should also note that there are cases where mutable objects are overwritten in a function thereby losing reference to the actual object passed to the function.

>>> def testfun(b):
...     b = b or {}  # Creates a new object if b is false
...     b['test'] = 2
... 
>>> b = {}
>>> testfun(b)
>>> b
{}