but i don't understand the base station. does it need to be wired-up to each component? or does it simply hear the RF, translate to IR and then transmit to the nearby components?

Yes it needs to be wired up to each component. The rf base station has outputs on it that need to connect to each piece of equipment. Every component has either a ir window on the front of it &/or and ir jack in the back of it. If it's placed on the front it's called an ir flasher and it needs to be attached where the ir window is. If it's plugged in the back it's called a 1/8" mono mini cable (I am not sure if Harmony works with mini cables because I don't sell their remotes). Mini connections are usually a much better option because they are hard wired and less likely to fall off.

The rf base station has an rf antenna built into it. So that when you hit a button on the remote the it receives the signal and then translates it to an ir command and send it to each component. Giving you the ability to control the equipment from a remote location.