Does ESPHome bluetooth proxy require the ESP32 to have internet?

If using the esphome website installer for bluetooth proxy, I see that the yaml file is (after adopting):

substitutions:
  name: "ble-proxy-02"
packages:
  esphome.bluetooth-proxy: github://esphome/bluetooth-proxies/esp32-generic.yaml@main
esphome:
  name: ${name}
  name_add_mac_suffix: false

wifi:
  ssid: !secret wifi_ssid
  password: !secret wifi_password

meaning there’s a reference to an external web site.

Does this mean that the ESP32 is cloud dependent, and needs an active internet connection to work? Or is it just that the ESPHome Home Assistant integration reads what’s on that github site and adds that when compiling?

I guess it would be OK to copy the contents of that github yaml to the ESPHome yaml config, but I noticed that there is what (to me) looks like a circular reference, i.e.:

dashboard_import:
  package_import_url: github://esphome/bluetooth-proxies/esp32-generic.yaml@main

What would you add to the ESPHome yaml file to avoid any reference to external web sites?

I don’t know if it’s possible. But maybe you can download the whole external.package files and store them local. Then change path to local location?

I don’t know if this will work. But seems logical.

Esphome relies on the internet for downloading compilation files. It is based on platformio after all.

But in operation it is not good based. It just downloads a bit of source code and compiles it into your non cloud based esp device.

So it wouldn’t be a problem to have all ESP devices on a VLAN with no internet access, as long as Home Assistant (on another VLAN) can communicate with them?