other8026 Odd that's not the case for me. I just tested it. I allowed google photos to have network permissions, then was able to download whatever it needed and used magic eraser. I then revoked network permission, and took a new picture, and tried again the magic eraser and I got the same message "Can't install more editing tools; an internet connection is required." Seems for me to need network connection.
Edit I had google play services installed but without network access. Once I turn network access, then editor worked even with photos network access revoked. So clearly it needs google play services to be connected to the internet to work. So not sure if that means it is not really on on-device thing?