TL;DW: Apple Intelligence is Apple training their models locally on your personal Apple product data (aka anything you do on an iPhone, Mac, iPad or your Apple ID) using their Apple Silicon chips as well as building a Apple Siri voice assistant client for OpenAI's ChatGPT. The features seem gatekept to newer Apple products and they claim it's opt-in.
It looks like "AI" is here to stay as capitalists have placed it in most supply chains and industries. Goes without saying, but don't buy Apple, you're just buying yourself a one-way trip to a digital jail where the walls are made out of "seamless apple ecosystem" and "shiny metal devices that are cold to the touch."
Especially don't buy anything from the Apple Store because that's trashy Global North treat brain behavior.
It should work without internet. The models and software needed to use those models are part of the OS itself. But with tech companies you never know. Apple is marketing their AI features as more "private" than what the market has to offer right now so it would be stupid if they make you require an internet connection for it.
Thank you for helping me understand! That is a really cool feature.