Am I understanding this technique correctly?

Basically the ICE drives one end/input of an "open" differential and MG1 drives the other via planetary reduction gearing. In order to remain stationary with the ICE at idle MG1 counter-rotates the opposite end/input to the differential and thereby the differential's "output" shaft remains stationary.

Stop the rotation of MG1 and the diff'l's output shaft follows the ICE RPM.

So MG1 actually controls, provides, the infinite"gear ratioes" of the FEH/MMH "CVT".

???

The torque from both the engine and motor is applied to the diff. to drive both axles. They do not independently drive one wheel through the open diff. The torque is combined before it reaches the diff.

I was referring to the "CVT" as if it were a combination open diff'l and planetary gear set.

The generator does all of the engine speed controlling when the wheels are stopped.

Rather than think of it a a diferential it is easier to understand it as a power split, or "integrater", blending the power of the ICE, generator and motor.