Correct, and why you may want to expand the range simply, by adding more "n" as I outlined. Well, you're sort-of correct, as 1/5 would be a 20% reduction. Using 1/33 would give an average 3% reduction. 1/17 for 6%. 1/9 in my 2nd example for 11%. Dial-in what you need and works best for your steps, as you could freely adjust both the amount and steps of reduction. Tune it.
Here's the reason for the optional 1/n alternative — retard works well for reducing power, but also dumps-in a lot of heat. For the racer in the video it's fine, as he's using much better fuel than most of us on the street. For streeters using det-limited pump gas, randomly dropping a load of heat into a system that is already on the edge of the fuel's capabilities can trip them into detonation or preignition. For those users, progressive power-reduction is a safer alternative without the risks that retard can bring.
Use the one that fits your application.