In both cases, some .DMG files are on the store servers. In both cases, the store tools broadcast those .DMG files to the demo units.
Ok i hear what you have been saying this whole time.
Lets consider another option that others seem to have overlooked.
The Apple stores have free WIFI.
Theoretically if you were to take your macbook pro to this store you could then log in and download the copy of Lion free of download charges (note that you would still have to pay via your App Store account).
Consider then that if 100 people were to do this a day for the first 10 days of release.
That means that they would have downloaded 1000 individual 4.7GB installs.
Thats a LOT of bandwidth even for someone like Apple.
Now multiply that by the number of retail stores they have in the world (300+).
On working out the basic figures we would be looking at over 1,410,000GB
by day 11 world wide.
Thats a lot to ask.
But there may be another way around this problem.
For example what if the physical drives they have actually contain a form of proxy software on them.
Im not going to try to get technical because i have no idea if this could even work but its all theoretical so here goes.
This proxy is set up to the stores WIFI network.
The customer then logs into the App Store like normal and they then download the version that is stored on the proxy HD (this can be updated regularly and only 1 copy would need to be downloaded off of the internets once the initial version is installed)
It would save bandwidth, keep customers happy being able to download it at a store for "free" and also it means that Apple are not going to be raped over internet charges.
This to me would be the reason why they would look at releasing a physical medium to a store. So they can guarantee that ALL stores are EXACTLY the same on release day. And so ALL stores can offer this service to customers.
Sure it may sound far fetched.
Plus could you imagine the trouble of handing HDs to customers when some have 10.6.6 and some have 1.6.7 while others are running 10.6.8 (lets not even start on the ones that are running 10.6.5 or lower still and want to upgrade but cant). Each install would be different to include the updates and missing features etc. It would be a large HD to cover every possibility....or you could host the updates at a data centre and have the customers request specific files via the App Store.