I see a few posts mentioning "server" and lag. I assumed that the single player game would play fully on my PC and the online part would just be an ACK to battle.net. Is this not the case? Does the game play client/server even in single player games?
I understand that a continuous connection is required to play. My worry is that the play itself is split between client (my PC) and server (some server farm behind battle.net). I am hoping the play is all on my PC with some small set of information sent back to battle.net from time to time.
If play is client/server then Blizzard would need to setup servers similar to WoW... that would seem to be not the case as we are not paying a monthly fee for the upkeep of any servers.
Most of the game should be handled online. The more they can handle server side the more they can protect from hackers and botters, the kind that threaten to ruin D2 for a decade (well, pretty much did ruin).
From what I'm told, though, the lag you experience from a slow connection is negligible.
Media files are on your computer. How the game works is server side: Monster AI, Drops, Character stats, item drop, Randomly generated maps (the randomness is server side, it just tell your client what tileset goes where) etc.