Basically, yeah.

You wire it inline with your throttle servo between the Rx and the servo, and then the Rx loses contact with the Tx, the failsafe causes the servo to go to a pre-set position (you can set it for whatever you want, its like setting up an electronic speed control). I run mine at half-brake so it slows the car without locking the wheels.

if you lose reciever power (on-board power) you are in a bad spot. No failsafe is going to help you with that. Often a throttle-return spring can help pull the servo back to a closed-throttle position, bu there are some problems there too. Often, you need a pretty hefty spring to overpower the servo with no juice. Thats fine, but a hefty spring on the throttle arm is a lot of resistance for the servo to pull against all the time, so its going to increase wear on the servo gears and motor, and its going to draw a lot more power, so you are going to go through batteries (on-board) much more often.

Your best defense against losing power on the car is to run a good 6V rechargable pack (so the batteries cannot pop lose) and make sure they are always well-charged. That way there are no AA batteries to pop out and send your car careening into a curb, or worse.