Basically, hand gestures are for selfies (they call it "dronies"

), and if you use your phone only it has very limited range and speed. So you really need the controller.
$500 gets you the drone only, $700 gets you the Fly More Combo which also includes the controller and some other accessories. The combo won't be available till July at the earliest.
Another wierd thing is that the controller connects to your phone over Wi-Fi, as opposed to the typical cable. So you'd need to disconnect from whatever Wi-Fi you're on and then connect to the controller. Sounds like a pain to me...