Yep, you got it now.

FM vs PCM:

With FM, the data is put on the RF signal in a certain format. Most FM transmitters send out similar FM signals, except for the frequency shift, up or down. It's called PWM, or Pulse Width Modulation. The width of each servo signal varies accordingly with the position of the appropriate transmitter stick.

With PCM. the transmitter is still transmitting using an FM type modulation, but the data being added to the RF is coded differently, Pulse Code Modulation. Basically a Digital data stream. I don't know what it looks like. You don't need to know either.

You can't interchange FM equipment with PCM equipment, and even most PCM systems are not compatible with other PCM systems. Some transmitters, like yours probably, has the ability to select FM or PCM. Receivers don't have that capability.

(Corrections will be gratefully appreciated)

Now, stop typing and go out and fly!