Hi Ken,
Architecturally, this mode must use the database and GUI from the networked form, but must not use the network server code at all.
My reading is that they are telling you that you must only have one GUI and one database. You cannot have a "networked GUI application" and a separate "non networked GUI application". Likewise you cannot have a "networked database" and a "non networked database".
Perhaps another way of looking at it is to think of modules: You will have one module for the GUI, one module for the datbase, and one replacable module for either network access or local access.
Does this make sense of it?
Regards, Andrew