Is there an example where SPFX form is used inplace of List New/Edit form and it works seamlessly

null null, on content types you can still point them to a custom display form or edit form URL via the DisplayFormUrl and EditFormUrl properties. You can use this to point to an entirely custom aspx page (based off the modern site master page), and then embed the SPFX webpart on it. Another option is to point to a regular modern page with your custom SPFX webpart added to it. When SharePoint opens the edit or display form, it will pass the mode (display / edit) and id (item id) parameters to it.