Yes, you have understood that correctly so far and it is basically very simple physics and you can easily reproduce it at home to understand it better.
So we ALWAYS have to keep in mind that there is still the point in the game that the wheels can rub against the body and thus be restricted in rotation and/or mobility. This "problem" always takes precedence and must be considered first of all.
But with a correct adjustment of the chassis, very low vehicle heights can be achieved, provided that all other determining factors of the chassis are adjusted to this height. For this reason, the vehicle height is the first thing to consider and now to be set.
Now it's just about the simple knowledge of what happens when and how to achieve the desired reactions.
Basically, it is clear that the closer you are to the road with your body, the stiffer and harder your chassis has to be - this actually affects every single component.
(The stabilizers are an exception, since there can be quite opposite settings depending on the desired driving behavior and intended use.)
To make it easier to visualize... a soft suspension needs a travel of X centimeters to completely absorb a bump in the pavement, to dampen the wheel in the upward movement and to push it back onto the road.
If I now significantly reduce the landing gear height, I have less maximum travel that the landing gear has available. So I have to set the spring and damper harder to achieve the same or even better damping over this shorter distance.
The important thing is... settings that are too high quickly lead to an uncontrollable driving condition, similar to values that are too low, the wheels lose contact with the ground and thus grip.
Perhaps this page will help to illustrate or explain it in a better understandable way but not yet in too much detail as it becomes too "exhausting".
KW