Seriously...I guess maybe this would have affected access to save games and settings for some people briefly? I was actively playing games and didn't even notice till I saw this story.
Nope. If it can't connect after being connected, it'll revert to stand-alone mode for 90 days. There are ways to force it to go into stand-alone mode all the time but you can google them. Saves are stored locally, and cloud saves are cached locally until it can connect. Settings the same deal.
This is a complete non-story.
I wouldn't say it's a complete non-story. I was affected for I guess about an hour trying to figure out WTF was wrong with Steam and/or my new Fallout NV DVD.
After installing Fallout NV from a physical DVD, activating on Steam and even pulling down the latest updates I could not launch the game. Fallout started up to the launch screen, but only gave me an option to Install (which I had just done, wtf?). Other Steam games wouldn't launch either, so I proceed to go down the trouble shooting rabbit-hole - blowing away blob files, re-installing client, rebooting, etc. Everything about Steam worked (websites, client installing/updating, etc) except for actually launching the client to login/play a game. None of the sites that track Steam uptime seemed to indicated any issues. Nothing on Steam Twitter feeds either.
Looked at my kid's PC (which already had the Steam client running) and launched games without issue. Logged out and then could not log back in. Verified it wasn't my Internet (hopped on neighbors wi-fi, different ISP), etc etc. Finally decided it was truly a Steam server side issue instead of something I had done on my PC. Just bad timing with my new game install apparently.
Steam had issues that affected me. Was annoying. I could have gone through the hoops to get offline mode going (there was no revert to offline mode as you suggested), but instead went back downstairs and worked on some x-mas stuff with my kid instead of taking the break I wanted to at the time. Checked back in an hour or so later and all was good again.