it's cloud, the doc is explicit that requests go straight to api.anthropic.com with Apple not in the way.

so Claude via FM dies offline while Apple's on-device SystemLanguageModel (the ~3B one) keeps working. It isn't a hybrid really: the framework just has both implement the same LanguageModelSession protocol so "local 3B" and "remote frontier model" become a one-argument swap.

IMHO what's worth internalising is that the two share an API but nothing else: the on-device path runs on Apple's Neural Engine and costs battery (you can watch ANE power ramp while it works) while the cloud path costs API credits/tokens and does zero local compute. Same code, opposite cost model.