Exactly. The ABY has one input (instrument) and 2 outputs. You run one output to channel A and the other to channel B. Then use the switch to regulate A/B or Both.
It's also great for running one instrument to two separate amps, and has phase switching, ground lift, etc for this reason.
I now use it to run 2 signals from by bass into a 2000s, leaving one pure and putting effects into the other signal. Note that this trick doesn't work with digital amps, ime, but it's a cool way to maintain that pure tone while still introducing some effects.
The ABY can also be turned around to run 2 instruments into one input, just plug the instruments into the "out" jacks and the amp to the "in" jack.