We started in step 2, by enabling hierarchy modeling and we chose Custom Position Hierarchy. You can only choose one or the other, not both.
We then created a position hierarchy in step 4 and step 5 and we assigned some positions in step 8.
If Developer now owns a record, that record will be accessible by users that have the Lead position. Rather than sharing, the position hierarchy will take care of rendering the records accessible. No additional configuration or manual actions are required.
Note that you will need to at least give the user read access to the entity to be able to view the shared records (even if Lead won't have access by default).