For continuity to work, it should be obvious that what you are working on must be stored somewhere other than the machine you have turned off. The obvious place is on iCloud. Just do not enable continuity if you do not want to enjoy is features.
Since the continuity feature requires Bluetooth 4, I figured the magic was done over Bluetooth and wifi.
I personally don't mind using iCloud, but I understand the authors reservations. But feel the root problem is the NSA, not apple. It's too bad that America has lost control of its government and is unable to fix this.
The sadder truth is that the root problem is Not the NSA, it's the majority of Americans who don't understand the implications of their passivity. America by and large wants the NSA to spy on them. Given the number of protests swarming Washington about almost every issue under the sun, there have been a dearth about the NSA. America doesn't understand the problem and thus doesn't want to fix it.
There is no text editor on iOS, so documents stored in TextEdit are not expected to be subject to Continuity. Additionally, I do not use iA Writer on iOS (nor do I know if there is even an iOS version), so it is reasonable to expect that unsaved drafts I have open in that program would not leave my computer.
