We study free-material optimization for nonlinear bond-based nonlocal diffusion and its localization as the interaction horizon vanishes. Bond conductivities are subject to pointwise bounds and a global material budget constraint. After normalization, the asymptotic behavior of these problems is governed by the fraction of potentially active bonds that can be assigned the maximal conductivity. We identify three distinct limiting regimes. If , the normalized optimal values converge to those of the classical vanishing-material optimal design problem, equivalently formulated as a Lipschitz-constrained state problem or a measure-valued flux problem. For , we obtain a directional local free-material problem governed by the upper tail of the directional -strain over position-direction space. Thus the state variable localizes, while the limiting constitutive law retains an internal directional variable inherited from the bonds. If , the limit is the isotropic local -Dirichlet problem. A convex minimax argument eliminates the normalized conductivity variable exactly, after which the analysis combines convex duality, nonlocal compactness, and -convergence for convex integrands. We prove a unified -convergence result for the reduced state energies whenever , yielding convergence of normalized optimal values and compactness and identification of optimal states throughout the full parameter range. At the vanishing-material endpoint, we additionally recover optimal measure-valued local fluxes from optimal nonlocal two-point fluxes.

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