Yes, you're expected to live close by. Why in the world wold you want to live more than an hour from your office/hospital anyways???
I had 4 weeks vacation during fellowship and during those times I was away my attending would cover call. We had a second fellow join during my second year so we started splitting call afterwards. That said, for a 2 year fellowship I took about 3 weeks total off, wanted to take full advantage of my time to learn and perform surgery. If I was in a 1 year fellowship I would have taken much less time off.