Your understanding is mostly correct.
If you have a single radio that will operate in STA + AP modes, you will need to set the channel to auto. This allows it to connect to the upstream AP, and then it will use that same channel for the AP mode operation. It is not possible to have the single radio operate on different channels at the same time.
In theory, if there were multiple different SSIDs (different names), it would be possible to connect to more than one concurrently, but they would all need to be on the same channel in order for it to physically work with a single radio. In practice, I have no idea what happens if you actually do this, but I can say that the general performance would be poor with multiple SSIDs on a single channel (due to noise/interference on a per-SSID basis, unless they were all coming from the same upstream AP's radio). But the more SSIDs that you use, the worse the combined AP + STA (+ STA + STA...) mode performance would be expected.
Now, all of that said, two other considerations...
- not all hardware/drivers actually support multiple SSIDs and/or STA + AP mode operation.
- If you are running AP + STA, the STA must come up first or else the AP mode cannot operate (because of the channel dependency). As a result, when the upstream AP is not available, the downstream AP/SSID will not work at all (not even for simply administering the router). For this situation, there is the travelmate package.