Yes, "Automation" in that dialogue refers to the basic track inspector tool (Volume fader, etc. - plus more for MIDI tracks (i.e. Controllers) automation items - and then additional sub-menus for effects (in the track ProChannel and FX bin) automation items. -And, FWIW, I have come to notice that using that selector dialogue also defines what envelope will be prominently displayed in the track view, and often immediately editable, especially once you expand the track view real estate. So, for instance, when I want to quickly edit the clip(s), or automation separately, etc., it really matters. -When I am being OCD about my mix, I often make sure only the items I want from each track are active with that dialogue, and/or sometimes just to "point out" what I need to remember is happening on a track.
And, in practice, I mix up (pun intended) using the "active - record" automation item creation, with the manual-dialogue method, determined not only by how I want to approach entering the changes, but sometimes it just needs to be done at least initially to even have an FX automation item show up in the lanes/automation selection menu at all. That's been my experience anyway.
JnTuneTech's post in "Track Automation" in Edit Filter was marked as the answer