I would like to have wireless access to a mac running OSX 10.8, but without internet sharing, i.e. only local access to the mac from a connected WiFi client. In principle I can share the Ethernet port over WiFi but if no cable is connected to the Ethernet port the WiFi access point goes down. Possibly one could share localhost (that is always up) but there is no such option in the graphical interface. Of course I could have a dummy switch or something else connected to the Ethernet port but this seems a bit odd. Any ideas how to solve this? Is it possible to set up internet sharing from the terminal in order to share 'localhost'?
On the mac: Right click the wi-fi icon
Click Create network. By default it will use the name you have given your mac as the network name.
On the other host, it should see the new network. Join it.
You want to be able to remotely access a Mac via WiFi, but NOT have that computer be connected to an external network? I'm not sure whether you can do that with the built-in Internet Sharing, because as you noticed it will shut off sharing if there is no connection available to share. However, you ought to be able to solve this with a cheap wireless router. Even with no WAN connection the router should hand out addresses, so you can connect to the Mac by assigned IP.