It depends entirely on the human doing the work. It is completely damaging to the horse's training mentally, IF the human is allowing the horse to: lean on pressure, forge ahead of the human, be erratic, get lost, make assumptions, take over the exercise, change the focus of the task, pull on the human, push on the human, bite strike kick at the human, desensitize to the humans movements and over-sensitize to the environment...and did I mention lean on pressure?
IF the human is aware of the things that can go wrong, as in above, and those things either never come up, or the human continuously shapes away from those so they go away in their entirety, THEN and only then, can groundwork be a very powerful, and Helpful training tool.
Less is always more, especially with a baby or young horse. And with the exception of leading, handling of feet and sensitive areas, sometimes it's best not to do anything at all with a baby or young horse if the person it's not HIGHLY adept and skilled at training.
Groundwork can be a ton of fun, but training is a serious thing because you are shaping the way something else thinks. And always remember sometimes what you think is fun, is not fun for something or someone else.
Keep it interesting, but not overwhelming. And keep it calm, but not dull, and you'll usually stay on a good track!