The catch is that it has fewer "features" than a big expensive router. To me, that's a good thing. I used to run my network on a bunch of AirPort Extremes since they supported a similar "mesh" very early on, but they were extremely unreliable.
Then the RT-AC5300 came out and I thought this was it. But the firmware is so buggy that it doesn't even matter how many radios or whatever buzzword thing it has. The problem with all these giant routers with 1000 features is that the companies really aren't that good at writing software or integrating it into whatever Linux distribution they have running on the thing. It's always a buggy mess.
Just as an example, sometimes all my Bonjour (mDNS) using devices would just stop seeing each other. I'd have to ssh into the router and restart mDNSResponder for it to work again. I just don't have time for that stuff. My kid starts throwing iPads around when the network isn't working.
Okay, to the questions:
1. You can't keep the original router and run the mesh.
2. They're fairly large things due to the vertical antenna array. Roughly the same size as an AirPort Extreme. You could fit 4 OnHubs in the footprint of a RT-AC5300. I can't think of a way to mount them, but I'm sure it could be done. I've just hidden them around the place.
3. Yes the LED can be turned off. There's a slider in the app where you can control the brightness of the LED of each unit.
4. Yes. All features work identically across both devices. They run the exact same firmware version (a version of Chrome OS). The app can communicate with specific nodes for some things or push out a new configuration to the entire mesh.
5. The OnHub ships with an ancient firmware release that is unaware of the mesh. It needs to be connnected directly to the Internet for 5 minutes until it updates to the new firmware. After that it works in the mesh with no issues. I think this is the reason why Google isn't advertising this ability.
Hope that helps.