Paul hi,
your understanding of the garmin altitude is correct but there is
more to it than that.
When you put the correction in you should be at a known height, taken
from say a TOPO map and you can then input the correct height. What
this does is give the garmin an understanding of a certain air
pressure at that location equals a particular height. You can then
start riding and the altitudes are going to be reasonably accurate at
least for the initial part of your ride. However air pressure is
constantly changing, I am sure you have seen Highs and Lows moving
through on your weather maps, and if you return to the same point in
an hour or 3's time the altitude will be different. Not because of
any inaccuracies but due to the changing air pressure.
I personally don't use the "correction" feature of my garmin as I am
not that interested in the absolute height but only the relative
height. For example I am at 90m now and in 1km time I am at 120m or a
3% climb :-) and using relative air pressure to determine altitude
shifts over a short period of time is fairly accurate as air pressure
is a long term period like hour plus not the minute to minute
calculations that we use/need/want. Unless of course there is a
severe weather event happening ie cyclone and who would out on their
bike then :-)
I guess what I am saying is the correction is a bulk shift and only
really accurate for that location at that time due to changing air
pressure so any feature to apply corrections so you return to the same
height at the same location needs the known air pressure at a given
time at a given location. Which is the way aircraft do it but I am
not sure it is needed for bikes.
cheers
Norman