> is an MMO “functional/playable” if you just release a localhost server? Are we forcing indie shops to pay for servers indefinitely now?

The man behind Stop Killing Games has made it perfectly clear that they do not want to force game developers to continue operating servers. Rather, as you suggest, releasing server binaries would be acceptable. Although a mere "localhost" server would likely not be sufficient, because (if I interpret your suggestion correctly) it takes away the multiplayer funtionality of the game. I think it would be reasonable to require developers to release online multiplayer capable server binaries.