correct, the point of doing something like what i'm describing is to have a system for keeping / creating N unique passwords stored only in your head, in a way that provides an acceptable amount of strength, avoids disclosing all of your passwords if one is compromised, and doesn't require you to be a savant of long-random-string memorization.

there are plenty of things that this isn't an appropriate approach for, and fwiw I wouldn't tell someone it would be a good strategy for all their passwords.

it can be useful when you have a set of longer lived passwords that you need to care about guaranteeing that the entire set can't be snarfed without holding you at gunpoint.