Yes it is a hub, not a domicile for pilots.
It does seem close to Memphis, but originally they wanted a second Domestic Hub to be in St. Louis but the City passed on that as TWA was doing ok at the time. The idea there was that St. Louis and Memphis were so close they could flex the system either way, and/or truck easily between the two hubs. Indy stepped up after St. Louis turned them down.
Simply put, it was started as a reliever for Memphis, but has grown to be a sizeable hub, especially on the night side. Memphis is maxed out on the night side with room for growth only on the day side. I've heard that someday Indy may grow as large as Memphis but who knows. Indy is mostly Domestic but does have some International Flights.
Compared to the Pax side of the industry, it does seem odd to have a hub so close to another but it works on the cargo side. We actually have a really nice small Hub in Dallas/Fort Worth at Alliance. At one time there were a fair amount of flights there, was pulled back and has grown again, but is a shadow of itself. I don't know why it isn't used more, I've heard various reasons such as NAFTA to its proximity to Memphis.