Their "DRM" is just the side effect of them not releasing their server code. I don't neccessarily agree with the decision, but a 'primarily' online game where most of the long term community is composed of online multiplayer gamers, they are playing the long game here by removing some of the risk of item duping schemes.
If you can access the server code to play single player/lan from your PC, it's only a matter of time before someone reverse engineers it to find an exploit, once the duping-genie is out of the bottle, it's pretty difficult to put back. My assumption is that this is exactly how duping occurred in Diablo2, and they made the change to prevent it from occuring in diablo3.
Complain about DRM all you want, it likely had little to do with piracy prevention, SP/LAN is just an innocent bystander in a quest against hacks.