"That is exactly how it works"
As John says - but with the proviso that "it" does not always work as it is supposed to. In general, the living - or those with no death date, but born within 100 years - are not visible, but sometimes the system breaks. Been there, suffered through that. That is why my primary tree is now private, after at least 3 failures of the privacy-of-the-living in the last 5 years.