Not sure if i got your question right, but it is like this:
Usually you will
attach 2 or more hardware buttons and a physical LCD
With the serial monitor option you can do:
attach 2 or more hardware buttons and simulate the LCD via the serial monitor
or
simulate 2 ore more buttons via serial monitor and attach a physical LCD
or
simulate 2 ore more buttons via serial monitor and simulate the LCD via the serial monitor
Oliver