I just installed it about 5 minutes ago. On the "setup your account" screen, there is no option for a local account. You must login or create a new account. Now, once you go to create a new account, there's a low-contrast option at the bottom to skip this step.

I think I'm fairly computer savvy, but had I not searched on how to bypass this, I probably would have set up an MS account. For "normal" people, I'd say this will be extremely effective at increasing their "conversion" to Microsoft Accounts.

It's extremely hostile.

This is only true of the public beta. It bothered me as well when I tried it out, but after a few searches I found that the RTM will still have local accounts. I assume the decision was made to keep in contact with the beta testers or something, but my hotmail account is a glorified spam catcher at this point, so I've never bothered to check.

[1] http://news.softpedia.com/news/Windows-8-1-Preview-Won-t-Sup... (This isn't the article I read back then, but it's the first thing I found when I just searched.)

I just installed using the MSDN "RTM" version, not the preview. The option is there, it's just intentionally hidden, and the first page gives zero indication it's possible to use a local account. You have to start the MS Account creation step, then at the bottom of the screen you'll see the option to skip.