They aren't harmless. If your 5 yr old scratches so much that scabs/open sores are formed. Those sores can then be infected by secondary skin infections (which there are loads of those, staph being the worst and most likely). You can also form cellulitis, impetigo, piedra infection, etc. Head lice is not a laughing matter, and we shouldn't down play what issues they can cause.
In my kids, the worst was the loss of sleep. They couldn't sleep for long before waking up to scratch. It was even worse for the younger kids, who would basically scratch until they passed out from lack of sleep. No amount of gloves helped us, or trying to get them to stop scratching. In their minds, it itches...so must scratch.
As a person who posted elsewhere about having it for months due to another parent's lack of ...awareness? I think having lice long term is horrific, especially for kids with eczema (or other skin issues and allergies). I can't really describe the agony we all went through.
TL;DR - It is hazardous to your health. The head lice themselves don't cause disease, but all kinds of complications happen.