You have the essence of the idea. There will also be a subfolder created for the document type.
The SharePoint subfolders will be created based on the card that the document is attached to (see below).
SharePoint Site – (Site)
SharePoint Folder – (Folder)
Document Type – (i.e. Sales Order)
Document Number – (Folder)
Attachments – (files)
The first three points will come from the settings in DocXtender Setup. Please see the knowledge article regarding configuration for DocXtender, below.