Local Operation is available now: just not from SmartThings
There are multiple home automation systems available in the low cost range which are primarily local. Some of these, such as homeseer, are at least as powerful as SmartThings. Many preexisted smartthings, some are new. (Apple’s HomeKit, for example, runs everything locally except voice recognition, and that can be done over cellular as well as over Wi-Fi.)
If you want local operation, there are lots of competitors to choose from.
SmartThings and the Leapfrog game
What’s SmartThings initially did that was different, and what gave it the big press buzz in 2015, was offering a combination zigbee and Z wave system in a low cost range which allowed customers to do two things: write very complex logic for their rule sets which would be hosted by SmartThings (smart apps) and write their own custom device handlers. All in a system where the mobile app screenshots looked consumer-friendly.
And their cloud-based platform enabled easy integration with a lot of the newest stuff that was coming on the market. So they had a Phillips hue bridge integration, an IFTTT channel, Amazon echo integration, and unofficial nest integration long before their pre-existing locally-based competitors.
All of which made smartthings the “ooh, shiny!” Home automation story for 2015.
But it’s 2018 now. The competition has caught up. Multiple companies now offer both zigbee and Z wave. Many have added cloud integrations for at least the most popular devices. It’s true that a lot of them still don’t let you write your own device handlers except maybe as plug-ins, but that’s becoming less important.
SmartThings’ next big jump is coming
People have been talking about the benefits of local processing for Samsung SmartThings since Samsung bought it 4 years ago. Not much has changed with the exception of some limited features and smart lighting, and that option doesn’t run custom code.
Samsung’ new platform is in development should be here within a year. Again, lots of discussion in the forums about it. It probably will have more local processing, and it will definitely be more reliable. But custom code will likely no longer be hosted in the primary cloud. And at the present time individuals are limited to 10 custom smartapps, although that will probably change.
It looks likely that long term you’ll still be able to write pretty much anything you want, but with a big difference: you’ll have to host the custom pieces yourself. That’s good for overall stability, but does make things technically more complicated for the individual developer.
The hardware Samsung loves to sell
Samsung is primarily a hardware company, with a ton of different lines and lots of patents. (No patents for the SmartThings hub, however. Which tells you a lot if you pay attention to that kind of stuff.)
And do you know what they really like to sell? Televisions.
Based on these trends, Samsung continues to strengthen its leadership in the global TV market. According to GfK and NPD, between January and August 2017, Samsung was the number one player, recording 34 percent of total global TV market revenue, higher than the market shares of the second and third largest players combined. The company also recorded 42 percent for big screen TVs, 60 inch and larger, and 38 percent for UHD TVs. Samsung also led in market share based on TV pricing, with 44 percent in TVs, priced over USD 1500, and 37 percent for TVs over USD 2500.
Also high-end appliances and cameras.
They want to seem high tech, easy to use, sexy, and worth very high price tags.
Samsung sells an expensive (over $3,000) unit in this category every second in the United States.
Those are the hardware sales they care about. That’s the market segment they care about. Plus, of course, some mobile phones. 
Their vision of IOT fits into their vision of appliance and television sales. It’s an add-on feature. They don’t really care whether you use it or not as long as the feature being available makes you buy more of their appliances and televisions.
So…none of their development decisions are likely to be based on what people in this forum have been asking for four years. Or on how many $99 hubs they can sell. Or on the logic of local processing versus cloud for IOT. Over on how “simple” things would be with a different paradigm.
They already have a new paradigm coming.
As for the rest: if you want an IOT system for your own home based on local processing, there are a lot of alternatives out there you can consider. But you’re not going to change the course for this ship now.
Just sayin’… 