I understand that Google's plugin for Eclipse tries to emphasize the "code-test-debug" cycle and make it as quick as possible, and that it comes with a medley of tools for doing just this.
What I don't understand is the need for a "developer" browser plugin for running your app inside Eclipse and testing locally on localhost. Why can't the plugin just start an embedded webserver and host it from there? Why does the browser require this plugin in the first place?
Tangential to that is the question of how it relates to development mode in general. Is Eclipse running in some kind of "special configuration" when in development mode that lets it talk with this browser plugin under the hood? If so, why is this necessary? Thanks in advance!
I believe you mixed two separate things here: GWT and GAE. GAE does not require browser plugin to run local dev server, while GWT requires browser plugin to run local dev mode (and even this is going away with 2.5 super devmode).
The confusion comes from the fact that Google bundles this two separate technologies into one plugin bundle, the GPE.
To avoid this just uncheck GWT when creating new GAE app.
Edit:
GWT dev plugin is only needed during dev mode. In this mode GWT Java source is not translated to javascript, but actually running in JVM as Java. This is needed to support debugging: https://developers.google.com/web-toolkit/doc/latest/DevGuideCompilingAndDebugging#DevGuideDevMode
Edit 2:
If you do not like the browser plugin, then you can use production mode on your local server. The downside to this is that compile-run will be greatly extended, since devmode compiles in-place: you can simply change GWT code and see changes by simply reloading browser window.