This only works if the game was successfully authenticated at the time the Steam client went offline; if authentication failed that game's files are worthless. It's also not possible to install a game while offline (whether from a retail disc, a Steam backup or a manual backup of the game's steamapps subfolder).

In the event of Steam going away forever there is no way to perform future authentication so everything is worthless sooner or later.

that is not clear they have said steam client revert to offline mode if something like that happened
also
http://www.rockpapershotgun.com/2013/11/05/valve-fixing-steam-offline-to-run-indefinitely/

As I said the offline mode only works for games that have already been successfully authenticated. It does not in any way allow access to games that are not currently authenticated. This is a deliberate limitation for DRM purposes.

It also means that when steam dies and after a while when your computer dies as well, you will lose access to your games.

Although some users probably don't care about this (I remember when Bioshock came out, people were saying that it didn't matter you only had 5 installs as if you couldn't complete it within 5 installs, you were an idiot. Kinda ironic really.)

steam dying completely seems like a remote chance of happening , if sony survived its hack and came out after months stronger and better i dont see steam having issues, besides the profits its earning dont seem to indicate any chances of dying.

regarding the drm limitation i am curious to know what they will do with gfwl games when the client shuts down in a few months , i assume it works on the same principle of authentication you mention ?

I wouldn't be so trusting of steam never dying completely. In an insolvency event (Enron or Bear Stearns giving two examples of companies people thought to big to fail which looked profitable) all bets are off.

As for GFWL, most games are safe in so far as they don't use GFWL as DRM. So things like Bioshock and GTA IV will continue to work as they don't authenticate on GFWL servers. I've no idea what will happen to the "community" features, but as I've never given a damn about achievements anyway, I don't really care.

That's a myth and an urban legend. And using common sense should tell you that as well. If there was some magical kill switch to turn all Steam games DRM-free with one flip, then the crackers would have found it already (and it would be very stupid and insecure software design by Valve, SPOF = single point of failure for their DRM system).

In practice, turning all Steam games into DRM-free, clientless versions, would require all the game developers/publishers to publish separate updates for all their Steam games. For each game individually, one by one. And it is not Valve who would do that, but the game developers. After all, Valve is more and more heading towards a mode where they act only as a storefront, and have nothing to do with e.g. updates to Steam games from various publishers.

Take for example the recent stripping GFWL off of various games, and possibly replacing it with some similar Steam functionality. Why didn't that go as you suggested, e.g. Microsoft just flipping some magical kill switch somewhere or publishing a new version of GFWL redistributable (update to Windows), and poof, any GFWL dependency in any of your GFWL games goes away? In practice the game _developers_ had to create updates for all their existing GFWL games one by one to make them GFWL-free, in case they cared enough.

Also there's the legal side, Valve would have to get a permission from all the game publishers with games in Steam, to turn their games DRM-free. You could argue Valve could have that kind of agreement with each publisher already beforehand... but do they? Maybe some indie game developer can tell if Valve has told them that they reserve right to strip the game out of any Steam-dependency and DRM.

That has nothing to do with what Arkose said. That article just stated that Valve has promised to fix the broken offline mode, which would not stay offline for very long.

The authentication issue that was mentioned is still valid. Even if the offline mode worked perfectly (buhahaha!), you could still continue playing only those Steam keys that were already installed and authenticated on that very PC, or those Steam games that happen to be DRM-free (ie. can work without the Steam client already now).