Yup, anti piracy masquerading as an auto updater. Kind of like windows in that respect.
And yes, you have to go online every time you want to play.
When I stil had dial up, I got a Demo CD with a games mag that, rather than having the whole demo on disk, just installed Steam which then told me to install the demo. It took me two whole days to download the demo on dial up. And then it updated again. And again. And Again.
This is why I don't have Half Life 2.