Google's motto is "Don't be evil". I guess they don't think that spying on every thing you do is evil.
That's the only reason I can see why your Chromecast video needs an internet connection to function, even if all you wan't to do is cast videos stored locally on your laptop to your TV.
I recently picked up a Chromecast Video in preparation for a a weeks snow holiday at Thredbo, thinking it would be handy so the kids could watch some of their own videos on the TV in the chalet. The chalet came with WiFi internet, but the cheapskate owner must have purchased the cheapest possible internet plan with the lowest quota, because even though all the right lights on the router were lit, there was no internet access.
This caused big problems trying to setup my new Chromecast, which needs to download some updates when it is first configured. I can understand why it would need internet access for that.
But once it is setup it refuses to work without an internet connection. The only reason I can see it might need an internet connection is so that it can spy on you and report your viewing habits back to google.
I managed to get it working by creating as hotspot on my iphone, having the chromecast use that hotspot for internet access and use my laptop to connect to the chromecasts WiFi to configure it.
But that's way more complicated than it needs to be. It really should be written on the box in big letters:
REQUIRES INTERNET ACCESS!
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