“If there isn’t a connection, no games or apps can be started. If the connection is interrupted, then after a period of time—currently three minutes, if I remember correctly—the game/app is suspended and the network troubleshooter started.”
Durango, the codename for the next Xbox, apparently requires a constant connection. Microsoft is generously allowing a brief service interruption, three minutes, before pausing the game and trying to diagnose the network problem.
I think EA’s SimCity disaster would make them think differently. This is likely just for developer units so they don’t go missing. At least I’m hoping that’s the case.