The doc is explicit: http://www.adobe.com/devnet-docs/acrobatetk/tools/Wizard/personalizati on.html#available-settings
Grant offline exception: Sets the PRESERIALIZATIONFILEPATH property. PRESERIALIZATIONFILEPATH grants an offline exception to the online activation requirement for volume serial numbers. If Adobe servers cannot be contacted, no activation occurs. However, if Adobe servers can be contacted, activation does occur.
You need internet access on the machine used to create the transform.
The same info resides in the admin guide: http://www.adobe.com/devnet-docs/acrobatetk/tools/AdminGuide/licensing .html#activation-workflow-details
Ben