I found a blog post outlining exactly that. If you use it locally, it will install and start a service temporarily. That service runs as SYSTEM and invokes your command. To succeed, you need to be a local administrator.

If you try the same remote, it tries to access \\remote-server-ip\$admin and installs the service with that. To succeed your current account on your local machine must exist on the remote machine and must be an administrator there.

So in short: It only works, if you’ve already the privilege to do so and the tool itself is not (ab)using a privilege escalation or something like that. Any hacker and virus may do the very same and doesn’t need psexec - it’s just easier for them to use that tool.