If you didn't see it, the FAQ partially addresses your wifi concerns: "Does Board need WiFi or batteries? Board plugs into the wall, no batteries required. WiFi is only needed when you want to download new games. Once it’s powered on, you’re ready to play."
Obviously they could add ads later, but it's a little reassuring to know that it's designed from the outset to work without an always-on connection.
Not sure. As a developer I like the concept, but the more I read of the legal, the more concerns I have. It reads more like an online tablet, but without service guarantees. Maybe some of the legal was for the website, it wasn't clear to me. But there was also mention of social media, complete game usage collection, and phone and email direct marketing, defaulted to opt-in.
Other than downloading the games and updates, the device is fully functional offline.