I think because smash has for so long not had online and when it has been implemented it has been very poor relative to other franchise competitive games, this community tends to totally invalidate online practice to a detrimental level.
I come from other games, notably CS, where there is a very similar difference between online and offline play because of latency. The effect obviously exists in all games, but in some it is a more magnified difference than others, like FPS and FGC games. That being said, in CS we call players who are very good online, but bad or presumed to be bad offline, "onliners." This is theoretically because their style will not work offline, that they are in some way abusing latency or other things that just won't work with the same consistency as they do online. The difference is in CS, is that for any player looking to get better, a solely LAN environment for practice would be practically impossible. You just can't have a 10 person LAN all the time, so online practice has to be used for a majority of things.
I'm relatively new to smash compared to most people. I play mostly online because my friends that got me into the game don't live near me. I choose to treat online practice differently. I know that I'm going to lose to some lag stuff or certain kinds of styles are going to work better or not as well because of lag (what people call "For Glory strats, things that work better online than offline). So instead, in offline games I work on things like thinking about the game, mentality and mix ups. Regardless if what I can execute what I want and it working doesn't matter to me as much as trying to understand my if my choices were correct. I use an idea from a CS player who basically said making the correct decision and completely missing the enemy is far better than making the incorrect decision and getting a kill. I also try to work on big picture things, like spacing and using combos intentionally at various percents, or even just having smooth movement. Of course, all of these things always apply to playing good smash, but in online you cant rely on execution or you opponent playing in a way that mimics offline play accordingly, so I never try to think about the game exactly the same, because it simply isn't. I know that in offline practice, I get much better much faster, so these are the games that I take the most holistically when trying to improve my game. However, online play has allowed me to work on my game in ways that ease the job in my offline play. My mentality going into offline games is almost never about winning but about improving, and my mentality going into online games is even less about winning. Especially when a lack of MM system comes into play, you might be playing someone way above or below you in skill.
As for the muscle memory thing, there is obviously a difference. And maybe I'm just better at adapting because I've done it for so long through so many games, but personally I don't have a problem switching between both given some time to adjust. Of course, large amounts of lag are just not worth it, but for the majority of games, it just takes me some time to adjust. I would never want to go from online practice instantly to offline tourney matches, but otherwise adjusting to it doesn't seem like it deteriorates my game. Perhaps for most people in smash, online might be frustrating or seem worthless. But I don't think it is honestly, you just can't approach it like it is offline, because it is a different form of the same game. It is obviously not as good as offline, but there are players from other games who have played predominantly online for 10 years and are still some of the best players of their games in history.
tl;dr- don't view online and offline the same. Online isn't nearly as useless as you might think if you approach it in reasonable ways.
