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This seems very cool. Is it possible to develop locally offline? Or do you always need a connection?

You don't need to modify your Django projects in anyway to use it! Super easy to come, super easy to go.

How does this abstract local file (write) access away? Does it redirect it automatically to S3 somehow?

It doesn't. You need to put objects into S3 yourself. You currently have 512Mb temp space for staging files, if necessary. https://docs.aws.amazon.com/lambda/latest/dg/limits.html

I think another question is more important -- is it easy to convert an existing app to a Zappa app? Programmatically, that is.

It looks like any WSGI-compatible app would work. Note that your code itself would need to work within Lambda constraints (http://docs.aws.amazon.com/lambda/latest/dg/limits.html).