Inspired by the experimental findings of an exotic ferromagnetic insulating state in LaMnO$_3$/SrTiO$_3$ heterostructures, we calculate the electronic and magnetic state of LaMnO$_3$/SrTiO$_3$ superlattices with comparable thicknesses employing ab-initio dynamical mean-field theory. Projecting on the low-energy subspace of Mn $3d$ and Ti $3d$ states, and solving a multi-impurity problem, our approach emphasizes on local correlations at Mn and Ti sites. We find that a ferromagnetic insulating state emerges due to intrinsic effects of strong correlations in the system, in agreement with experimental studies. We also predict that, due to electronic correlations, the emerging 2D electron gas is located at the LMO side of the interface. This is in contrast to DFT results that locate the electron gas on the STO side. We estimate the transition temperature for the paramagnetic to ferromagnetic phase transition, which may be verified experimentally. Importantly, we also clarify that the epitaxial strain is a key ingredient for the emergence of the exotic ferromagnetic insulating state. This becomes clear from calculations on a strained LaMnO$_3$ system, also showing ferromagnetism which is not seen in the unstrained bulk material.
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