Yes that first part is correct. The second part, not sure. I think at one time it just looked at the IP of the hub and the IP of the device, and if on the same subnet it assumed local. They have made a lot of changes since that was said so who knows now.
Another thought though, when you first ran the app it should have asked for a bunch of permissions. Did you accidentally deny any? Go to the device settings, scroll down to the apps at bottom, find Hubitat. Make sure all permissions are enabled (especially Local Network).
