The Harmony is a very popular device; there’s much discussion of it in the forums. 
And in the official support documents.
https://support.smartthings.com/hc/en-us/articles/205653834-Logitech-Harmony-Home-Hub
However, it works a bit differently than you have described. You do not get control from smartthings that substitutes for the keys on the remote.
Instead, it essentially works the same way as the IFTTT integration with harmony: SmartThings can ask the harmony home hub to Either start or stop an existing harmony activity. You must have already created the activity in Harmony, and you authorize SmartThings to access your harmony account.
Originally this was done as a cloud to cloud integration, but the current official integration does run over your local area network, although it still has to access the cloud to get the permissions.
You also do the reverse to get control the other way. You authorize harmony to access your SmartThings account. Then your SmartThings devices will show up on your harmony accounts list of “home control” devices and you will be able to add them to harmony activities.
This is what allows you to, say, have the lights go down in the living room when you start a harmony activity called “watch movies.” It’s also it allows you to start a harmony activity based on a smart things – controlled motion sensor.
But the whole concept is based around the idea of harmony activities.
There are two Harmony remote models, the harmony home companion and another one that has “home” in the name that do have an additional five buttons that let you control “home control” devices from those buttons on the remote. Like changing the dim level on a specific lamp. But this is the exception to the way the integration usually works.
Harmony is used in several different ways with smartthings. It’s a good “man in the middle” for use with Serena shades or some other devices that don’t integrate directly with SmartThings.
Before the Yonomi and IFTTT Alexa integrations were available, SmartThings was also a very popular way to allow for echo control of harmony.