It creates the properties or items in your local wikibase with the same label, description, and aliases as it exists in Wikidata (but of course, with different Q/P ID). It then adds a "equivalent property" or "equivalent class" statement to the newly created item with a URI back to the Wikidata item/property. This allows sparql query federation for use of these items in your wikibase with the associated Wikidata statements (available through federation). 

I've tested it locally and hosted on AWS and the data federation works fine. LMK if this is what you had in mind..

-Greg