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Does NFC need to touch?

You have to tap them together. You can feel the resistance like putting 2 magnets together. You also get an audible chime when they connect. You have to keep the two devices relatively close, 1/4 inch or so during the transfer or it will abort the procedure. I use NFC all the time between my NS4G and Gnex, it works great. If the two devices aren't touching and connected, there is no way anyone can see your stuff.
 
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Just to add to this, NFC works even with thick cases on my N4 and my wife's N7. They don't have to touch, but they need to be in close proximity.

When I use NFC to buy something, no touch needed, transferring from NS4G and Gnex works best when they are tapped together for me, plus I just hold both phones back to back during transfer until it's completed, easy peasy. :p. And they both have TPU cases.
 
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