The Home edition of Windows 11 (as well as some later Windows 10 releases) all required an Internet connection and a Microsoft account sign-in at setup, pushing users deeper into Microsoft’s ecosystem. This process has some advantages, such as automated local disk encryption and recovery key backup, passwordless sign-in, quick access to Microsoft Store apps and services such as Microsoft 365 and PC Game Pass, and data syncing for apps such as OneDrive and Edge. But if you don’t use these features, want to sign in later, or prefer a good old-fashioned local account, there’s no easy workaround other than signing out or creating a new local account once you’ve arrived at the desktop.
This was not the case with Windows Pro editions, which still allowed you to create a local account even if you didn’t connect to the Internet during setup. That changes with the 22H2 version of Windows 11, which requires a Microsoft account regardless of the edition of the operating system. (In addition to Microsoft 365, which I believe is new to this version of Windows but may have been added more recently, setup encourages you to sign up for PC Game Pass.)
The only officially sanctioned exception to this policy is if you select “work or school” during setup rather than “personal use.” This allows you to sign in with your work or school Microsoft account, rather than your personal account. However, if you just want to create a local account or set up a PC without an Internet connection, there is no simple way to do so.
This policy only applies to new Windows installations; it has no bearing on upgrading an existing PC.