Pretty much correct.
The two heights are based off their relationship with the iron sights, either fixed or flip up. The original carry handle/fixed front sight set the original sight height, so even when one or both are replaced with other options, they are, or should be the same height.
Absolute co-witness means that the center of the optic is generally lined up with the front and rear sights, in such a way that when looking through the iron sights, you will be looking through the center of the optic. Having said that, it doesn't necessarily mean that the dot will line up exactly with the iron sights, as depending on the sight, and the user, there may be a slight difference. It does mean that your cheek weld is always the same, regardless of whether you use the optic or irons, however, fixed iron sights will obscure more of your view when using the optic, which lead to the lower 1/3 height becoming popular.
Lower 1/3 means that the optic is raised up a little more than absolute co-witness, so that when using the iron sights, you are effectively looking through the lower 1/3 of the optic. This option gives the user the ability to see over usually fixed iron sights, so that the sight picture when using the optic is not as obstructed by the irons. It means, however, that your cheek weld will change slightly when switching between the optic and iron sights. If you run flip up iron sights, it does not really serve any real purpose if you always run the iron sights in the down position unless needed, although some people prefer it for comfort.
Bear in mind, that this only really applies to optics where you are able to see the front sight through the optic, which is not always the case, even with some 1x optics. When using optics that do not allow the use of iron sights without removing the optic first, then you could effectively use whatever height you want, but something approaching absolute co-witness is probably best from a comfort/usability standpoint.
Some sights may appear to sit lower than others, even when at the above heights, due to the diameter of the optic, so for example, an Aimpoint PRO at absolute co-witness will appear to sit lower when compared with an Aimpoint T2, because the optic is larger. If you are concerned about the look, I would probably recommend that as an option. It is a little higher than your current budget, but they can be found used for a reasonable price. Some SMEs in the US are now beginning to run Aimpoints without BUIS, as the optics have proven to be reliable enough to do so, so that would also be a plus until you are able to change out the handguard, and buy irons.
Regards.
Mark