I just got an Xbox 360 a few days after Christmas at the same time my brother bought us another disk of Skyrim since the past two were damaged because of my other little brother. I've heard you were able to download games onto the system and play without the disk. I was planning to do that I wasn't sure if it's suppose to say install or download but it said installed and that what it did. Afterwards my brother immediately took the disk out to play it on the family console downstairs from mine. I go to the game and select it to play but it says "insert Skyrim game disk." I'm not sure if I did something wrong or if I need to do something more.
Installing the game stores most of the data on the console but the disc is still required to start the game. It's just a simple form of DRM to keep you from passing the same disc around everyone you know, installing will still prevent most of the damage to the disc from continuous use.