Yup, the camera does require the WiFi backpack to act as the wifi transmitter/receiver for the GoPro camera.
The app for the iPhone and/or iPad lets the phone act in place of the WiFi remote controller fob. So if you have a new generation GoPro (ie. Hero2) and don't want or need the stand alone remote fob for some other reason (we'll get into that a little bit later), you can save some money and just buy the WiFi backpack without the remote fob.
Before you can use anything, you will have to go through the usual firmware upgrades using GoPro Cineform Studio, done separately for each camera and each wifi backpack. When that part is done, connect the WiFi backpack to the camera, power up each component, & go to settings on the GoPro camera. Once there, choose WiFi settings, and select phone/tablet. For a shortcut to the WiFi settings, just short push the WiFi backpack power button.
Next, on your iPhone and/or iPad, go to settings, choose Wifi, and then select the name of your WiFi backpack as the chosen network.
Next start the GoPro app on your iPhone, and if firmware and network selection was done correctly, it should find your camera.
The iPhone app has some pretty cool features. From the main camera control screen, you can turn your camera on and off, and you can see your camera view in a preview screen to ensure your camera is pointing in the right direction and thereby eliminating the need for the battery-draining LCD backpack. In the gears/more panel, you can activate "find my camera," which will make the camera emit a repeating beep signal to help find a missing/misplaced camera. This is a neat idea, as long as you're within a close Wifi and sound radius. And deeper within the settings, you can clearly see and change various camera features such as recording lights, button sound, resolution, battery status, memory capacity, ect, without having to struggle by inputting directly on the camera which can be awkward with it's vague abbreviations & push-button selection.
Several minor disadvantages include a relatively short transmitting range for the WiFi backpack (maybe 20-30 feet). And if you do go outside the WiFi transmission range, the phone will "drop" the WiFi backpack and may pick up another default Wifi transmitter in proximity. When this happens, you will have go back into your phone wifi settings to manually select the backback WiFi network again. This is a little inconvenient, but this did not disrupt the camera recording that was in progress, and I could still regain control of recording.
There is one last drawback, and maybe this is not such a big issue for newer GoPro users. I have both the old and new GoPro cameras, each with a WiFi backback, and have been able to control each camera simultaneously with the dedicated GoPro Wifi remote fob. Having multiple cameras is cool to do if you have different views going on your bike at the same time (ie. front & rear, front & dash, front & rider, front & controllers). However, the new Iphone app will only work with the newer GoPro cameras like the HERO2. So, poor me, I'll still have to use the dedicated remote fob if I want to have multiple camera views when I use my older GoPro HERO HD camera with a WiFi backback.