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This means you can't pass the game around to your friends or sell it afterwards, which completely ruins the purpose of physical media imo. I mostly play PC these days so this doesn't affect me, but it's a disappointing direction for console games. At least they could've used an empty disc that has proof of ownership.
EDIT: Bethesda has confirmed that only the PC version won't include a disc. Physical versions of Xbox will include a disc. Whew.
A lot of games haven't been released on disks anymore, it's a real shame really.
I understand that games have gotten bigger, but they could always ship with a really cheap'O USB stick for the people who really want a true physical copy.
Since the 360 we've had install discs for sizes above Disc 1.