Do businesses still run air-gapped or isolated networks?

Yes, both exist. A true air gap means no network connection to another network. A VLAN or firewall can restrict traffic effectively, but there is still a connection and a control that has to be configured and maintained.

Some people also use air-gapped more loosely for highly restricted networks, so it helps to ask exactly what can cross the boundary. A data diode, for example, permits one-way data flow and is useful in some control environments, but it isn't a literal physical air gap.

Industrial control and manufacturing are good places to look. Isolation can protect equipment that wasn't designed for internet exposure, including older machinery and vendor software that can't easily be updated.

That doesn't mean every operational network is physically disconnected. Some are segregated and allow narrowly controlled monitoring or other traffic. Update cycles can be slow when the equipment depends on old operating systems or vendor compatibility.

For ordinary corporate environments, logical segmentation is often the practical choice. Think guest Wi-Fi separated from corporate systems, development separated from production, or cameras and building controls that don't need general internet access.

The central controller might still need a limited connection, so check the whole path rather than assuming the devices are isolated because they sit on their own VLAN.

Offline operation is where the vendor story gets messy. An installer may be available locally but still expect a license check, updates, or additional components from the internet. Development environments add package and library dependencies to that problem.

I'd ask vendors to demonstrate a complete offline install and update process, including licensing, before treating a product as suitable for an isolated environment. Getting files across the boundary still needs a controlled process, whether that's removable media or another approved transfer method.

Security and compliance requirements can be reasons to isolate systems, including in government-related work and critical infrastructure. But I wouldn't assume a particular regulation automatically requires a physical air gap. Check the specific requirement and what controls it actually calls for.