Hint: Ask yourself: Does it satisfies CR equation at the origin?Is $f$ differentiable at the origin?Is $f$ analytic at the origin? Do you notice it is harmonic function?Your explanation is sufficient: a function is (complex-)analytic at a point only when it is (complex-)differentiable on an open neighborhood of that point, and since your function is (complex-)differentiable only on a line, it is not analytic at any point.only has a complex derivative on the diagonal y = x.
As for the implications of the Cauchy-Riemann equations: they are the additional condition required for a real-differentiable function to be complex-differentiable. As you have figured out, the Cauchy-Riemann equations are a pointwise condition; this problem demonstrates that they may be satisfied at a point without being satisfied in a neighborhood of the point, and in this case the function is complex-differentiable at the point but not analytic there.
If you know about the view of the derivative as a linear transformation, the Cauchy-Riemann equations are exactly the condition that the derivative, a real-linear transformation from $\mathbb{R}^2$ to $\mathbb{R}^2$ should coincide with a complex-linear transformation from $\mathbb{C}$ to $\mathbb{C}$