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It's the co-op "tether" - it was explained by one of the devs but basically yes, they are forced to stay near you (the host).
I think the explanation was something to do with the co-op game loads everthing a certain distance around the host so everyone needs to be within that loading distance.
It is totally free to do it - you just have to have a PC capable of running it AND conan - or a spare PC that can run it while you play.
The dev already confirmed you can't get rid of the tether in co-op and they also won't be extending the tether distance - it's set