Smartthings remains primarily a cloud-based system. Even just changing the mode requires the smartthings cloud. Almost all code still runs in the cloud. The app itself always requires the cloud even if it is running on the same Wi-Fi as your hub (they didn’t have to design it that way, but they did.)
If you want a hub that runs locally, you’ll need to look at some of the competition like Hubitat, Homeseer, Apple HomeKit, Insteon, etc.
That said, there are some devices which can run locally in a smartthings set up when the cloud is not available, and you can almost always set up a situation so that you have a physical button/switch that can turn a specific light on or off. It’s just going to depend on the brand and model of the light that you were using. So if you’d like to ask a more specific question, we can certainly help.
Also, at the present time you will need to set up the automation using the smartlighting feature, not the automation creator.
Meanwhile, take a look at the following FAQ and it should give you some more information: