Hi themouse,
Originally Posted by: themouse 
Is this server based content mandatory or can it be local and distributed with a game itself?
Is this server based only during development?
It is all up to you. By default only during development you can ask the content server for your content project about missing content, which is a really cool feature because you can update content even while your app is running in development mode. See Settings.xml for details about that.
By default a build application does not use the content server at all. All content is already compiled and build into the package and can just be used offline. Of course you can also enable dynamic content downloading for your users if it makes sense for your application (but again, this is off by default when releasing anything).
Originally Posted by: themouse 
The reason why I am asking because I am not a fan of the idea that a user has to have internet connectivity
to play a game. I think this kind of restriction is a bad policy for game owners of which I am one.
Maybe I am just on a soapbox here :) but I think services / games like that violates the owners rights and
is a bad thing altogether. Take "Steam" for example, if I can't connect to internet I can't play my games.
I can't re-sell my games, trade them etc.
I'm not a fan of the cloud as well, no system is 100% secure.
Maybe I am getting the wrong impression or way off base.
True, but after the initial bad conception of Steam and especially the game Half Life 2 because of this in 2004, now Steam is the most successful AppStore on PC and pretty much the only one that has much to offer (even though its games only). Windows 8 will probably change that a bit ^^
We don't tell you how to write your game, we just give you some hints and suggestions, but in the end it is all up to you. If your game is singleplayer and offline we suggest just putting all content with it and sell it on an AppStore, don't bother with any DRM or online check as it will probably be hacked away soon anyway. We also suggest making your business model the best (currently FreeToPlay games seem to be a good idea ^^) and we provide tools to achieve your job in the best way possible (allow multiplayer, allow online content if you want, allow online services if you want, allow ads to earn money, etc.).
Originally Posted by: themouse 
Also when will file types like fbx be available? I would like to make 3d games not 2d.
Sorry to say, but we will not work much on 3D until v0.9.2, which is coming in December. Until then you can just import your own 3d content if you like (the classes are all there, it is just not supported in the ContentManager yet). Good luck