You're correct - TLS / SSL operate above the IP layer, so they know which servers you're talking to, when and approximately how much, and if they can see your DNS requests it makes it that much easier to know which sites that maps to. TLS stops them from seeing the actual data you're sending them (like passwords), which pages you're viewing, and it also prevents them from manipulating the data (unless they've subverted the PKI, like if your company laptop has a certificate installed that trusts your company VPN, you company VPN can do a Man-in-the-middle attack to subvert TLS).