Under Proxy > Recording Settings
You can enter specific locations to exclusively record requests to/from using include, or exclude to prevent locations from recording. It’s also possible to blacklist requests as needed by control-clicking in the structure section and selecting ignore. If you want to exclude requests to/from the computer that Charles is running on then you’ll need to close it’s web browser, email, etc. to keep internet requests intended to/from it to a minimum. You cannot ignore the host machine Charles is running on since it’s used as the proxy — but you can selectively include/exclude other machines/clients by using access control.
To use Charles as a “Man in the middle“:
Keyboard shortcut ⇧ ⌘ P, or choose from the menu use Proxy > Mac OS X Proxy.
NOTE: Option does not exclude (host) traffic incoming/outgoing on machine used as proxy.