The disc version forces you to have the disc in the PS3 when you run it, but it does not actually run off the disc. This is why there is a mandatory install that is the same size as the online download version.
That is because SOCOM Confrontation is a downloadable game that always runs on the HDD. Even if you buy the disc version, you still have to install and run it from the HDD. The software does a small check to see if you have the retail disc in to prevent you from installing it on all your friend's PS3s.