This means you can't pass the game around to your friends or sell it afterwards, which completely ruins the purpose of physical media imo. I mostly play PC these days so this doesn't affect me, but it's a disappointing direction for console games. At least they could've used an empty disc that has proof of ownership.
EDIT: Bethesda has confirmed that only the PC version won't include a disc. Physical versions of Xbox will include a disc. Whew.
This is a good argument for physical copies of pre-internet games. Now? The game you have on your disc is incomplete. You need the internet and an Xbox account™ to download 65 more gigabytes on Day 1 to avoid a bug where using a bow and arrow on a horse crashes the game. There's a Roadmap™ for the 40% of the game they're delivering as DLC over the next couple of years. Hell, on the Switch there are firmware versions that explicitly disallow you from booting game cartridges without downloading the update for that game - what happens in 20 years when Nintendo isn't serving those update files? How meaningful for preservation is your BOTW cartridge then?
Piracy and DRM-free digital content are the only methods of preservation. Full stop. The fight isn't physical vs digital, it's DRM vs DRM-free (pirated counts as DRM-free). If I buy a game on GOG and store its installer on my PC, which is backed up to my server, which has a SnapRAID array that tolerates two drive failures, that game's mine. It'll work if GOG goes out of business and takes down its CDN, it'll work if the dev loses the rights to the soundtrack, it's immune to the devs deciding I'd rather have Witcher 3 with ✨ray tracing✨, it's immune to Blizzard "reforging" my Warcraft 3, I can't have account details stolen and subsequently banned...