More the latter than the former, I’m afraid.
Search the forums for discussions of secondary controllers. SmartThings meets the minimum required to be certified as a Z wave controller in this regard, but it doesn’t have a lot of the additional utilities that devices that expect you to do this have.
For example, it doesn’t have controller replication, which means whenever you add new devices to the primary you have to completely rebuild the secondary if you want the secondary to see them as well.
There are no, repeat no, network mapping utilities.
And SmartThings as primary does not collect state information from the secondary.
So it’s not impossible, and some people do it when they have a specific use case, but it’s not elegant and it’s not very commonly done.
And this specifically does not happen:
Commands, status, values, etc. would be passed between the two in real-time, correct?
@geko might have more to add.