This “always-online” requirement has been implemented by Polyphony Digital in order to prevent save data modification. While it’s clear some data is stored locally — the ability to use your cars at your unlocked tracks while offline reveals that — it appears that a major part of it is stored on PD’s servers.
Some players have found that, in certain circumstances when online access is intermittent, they can be blocked from progressing any further in the game. That’s likely caused by a bad file overwriting the server-side save, and as the player cannot access their own save they cannot restore it with their own backups.
Full article:
https://www.gtplanet.net/gt7-save-data-recovery-20220413/?fbclid=IwAR1qDZgecUtwWb1MOF6l1RhxBhj4qBnd80kMamE0KfsjTVGzLw21NsoPyUA