I believe the animals do live in harmony and everything makes sense.
I've been pondering how the movie's creators may have intended the society of these animals to function. Because obviously the movie wants us to think that everyone's more than okay with the lions ruling the land. Well, except the hyenas, but I'll address them too in this article. The Lion Guard TV series doesn't apply here, as it wasn't created by the 1994 movie's creators and thus isn't canon to the movie.
Many theorizers seem to think that there's no logical way for these animals to live in harmony and that the lions are likely a tyrannical species. But I think there is a way, and they do.
Yes, it would appear most of the species have equal human level of intelligence and likely also equal range of human emotions which initially makes it seem absolutely brutal and wrong that some of them murder the others yet still the prey animals are happy about a new lion prince. But we need to remember that their world is not utterly comparable to ours. There's no one single species that has evolved high above all the others in intelligence. We can't compare their hunting to humans killing other humans, because unlike us the predators have to hunt and kill the other equally intelligent species in order to survive and thrive. And since this is the way their world has evolved, the prey animals wouldn't see it as something evil or unfair but simply one of the many natural ways of dying. One of the worst ways, sure, but still all natural.
The prey animals, also naturally, would have learned in the past that without those predators thinning their herds their environment would soon be destroyed because of their numbers growing too large for the fauna to sustain them or be able to handle so many hoofs stomping on it.
The Circle of Life philosophy isn't Mufasa's ruling policy or even invented by the long line of lion rulers, but simply the reality of everybody's world since the dawn of time. I don't think there exists a single species who hasn't accepted it and their own place in it.
On the contrary, I think the prey animals have developed their own ways of ensuring the long-term survival of their loved ones. They probably won't stray far from their herds, stay in as huge a herd as possible, and have their most elderly and the already mortally wounded or deathly ill stay on the outer parts of the gathered herd. So that when a predator or a group of predators do attack, their children and the strongest are very likely to survive. Those that would have potentially a long time of high quality life left. Those very old, mortally injures, and extremely sickly would probably choose to take that risk rather than dying even more slowly and painfully from whatever injury/sickness/old-age trouble they have. Especially as they know and understand that they won't be killed for fun but to help other species to survive.
It's likely similar situation with small prey like mice and voles and whatever.
As for them downright accepting a predator as their king and joyously gathering to celebrate and bow down to all future rulers at their infancy...It makes sense, too, the monarchy's existence ensures there's a level of control to the hunting as well as other laws to provide the residents with as peaceful life and death as possible. In Pride Lands, the prey animals may have much better chances of survival than on no-man's land or in some other kingdom with possibly a bad ruler. This is very much evident by how all the prey animal left the land when Scar took over and let the hyenas in and demanded the lionesses to hunt as much as the hyenas wanted them to. And then returned when the son of the former king who had shown understanding and respect of the delicate balance of the Circle of Life, reclaimed the throne.
They feel protected by the wise rulers because the laws they've established prohibit predators to hunt more than they need to live comfortably and feed their young. Granted, such law hasn't been literally stated to be in effect, in the movie, but it is implied. Because understanding the delicate balance of nature means that steps are taken to protect it, and the only way to protect it is to establish laws regarding it. Whereas a king can change the laws, which Scar most likely did to ensure no one can object to what he did with the hyenas.
Mufasa or one of his ancestors strengthened the royal family's bond with the commoners by banishing the hyenas from the land because they lack respect or care for the Circle of Life and instead over-hunt. And as the hyena is also a scavenger by nature they may have also been in the habit of stealing food from others, especially during the worst months of dry seasons. It may not be all hyenas in the world, but the particular clan we see in the film, that happened to be so disrespectful. Seeing to how unnaturally large the hyena clan was, I reckon a lot of them are descendants of the originally exiled ones. Perhaps some of them would live by the laws and would deserve a place in Pride Lands, but I think there's too much bad blood between a lot of the clan and the lions for the good ones to have a chance to stand out. Especially if there's a few generations of lion bashing passed down in the hyena clan.
There's also a good chance that the hyena clan that was exiled wanted to take over the land and control it instead of the lions, but because lions are larger and stronger and at least equally intelligent predators the hyenas lost the war and got exiled. This would also explain a bit better why the hyenas chose to leave and suffer beyond interior borders rather than just leave and find another land far away. Like, they were just biding their time waiting for a chance to strike again whilst remaining near potential prey and good chances to occasionally steal a quick hunt in Pride Lands. And then Scar eventually offered them the chance to kind of be the top predator in the land, with only him above them. But personally I prefer the idea of them being exiled due to disrespecting the Circle of Life. And then just out of spite stcking close by because they could, not thinking it through and ending up suffering from hunger because not many prey animals wandered into the Elephant Graveyard.
I think either is a possibility as the movie does have a hyena point out that they are the top predator just below the lion. But then again, one of the movie's biggest themes/messages is the delicate balance of nature and the Circle of Life. ("Some say 'eat or be eaten', some say 'live and let live'. But all are agreed as they join the stampede. You should never take more than you give.")
As for why the kingdom would have those interior borders to begin with? My theory is that the place was there long before the first lions arrived, and as it is seen as a graveyard of a species that has human intelligence and range of emotions just like lions, the first king didn't feel it right to claim such a place as his land.
So, in my view the society of Pride Lands and the Lion King world functions perfectly naturally and well, not disturbingly or unfairly. Just like our society/world it has good people and bad people, selfish and imature people as well as wise and compassionate people, sometimes in groups. And the Pride Lands have been blessed with the good fortune of having their ruling class be lead by a family that understands and respects the Circle of Life, and attempts to make sure they teach their descendants well and pass the crown to the one who deserves it the most.