Is the contract published somewhere? What if something unexpected comes up, say their spouse develops cancer and they need to move to another state to get the best treatment possible? Probably a poor example as Living Social would let that person work remotely, but still, it's a contract -- what are the consequences of breaking it? For similar offers, the 'apprentice' simply needs to repay some or all of the cost of the education.
Yep, that's my understanding -- it's basically "we spent $xx,xxx training you, then you left. We think you owe us $yy,yyy."
That being said, it's a company of humans. What good is a developer who's shackled to their desk while a spouse is distressed in another state? None. There will be a way to work it out. We want you to be happy and great at building software, not imprisoned.