The bridge will still work from your private network and one can still control the lights with the app.
All that's being disabled is the external control.
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All that's being disabled is external control through Phillips' servers.
If you're willing to set up port forwarding (and DDNS if needed) there are apps that allow you to enter both internal and external addresses, so you can still have external control.
...which all the digital assistants like Google Home or Alexa use, so this breaks voice commands for those. For most people, that's the main reason to have smart lights.
The V1 bridge does not require any outside access from an Echo device -- it communicates directly with the bridge over the local network. With V2 it requires a skill, a Hue account, and access from the internet to the bridge.
Are you sure it requires access from the internet to the bridge for V2? I think it may only require that the bridge can access the internet.
I have a V2 with "Out of home control" set to disabled and it works fine with my Echo Dot and with the Amazon Alexa apps on my phone and iPad.
My guess is that the bridge sends status information, including the bridge's IP address, to the Hue site, and the Echo can retrieve that information in order to find the IP address to send commands to.
You're probably right. I was trying to say that the v2 bridge requires some sort of cloud service to function with an echo when the v1 did not.
FWIW if you use HomeKit with a hub then it’s Apple’s servers not Phillips’ that do the external traffic.
That's specifically if you're using HomeKit remotely - if you're using HomeKit locally it works without internet connectivity, unlike Alexa/Google Home.