I believe you have the idea fundamentally correct, except you may be glossing over the fact that an NOL, being calculated on that worksheet, is designed to eliminate losses other than losses related to your trade or business.
A passive loss can be suspended and carried over from year to year until there is passive income to be offset or until there is a disposition, but an NOL can be used immediately to offset all other income, as well as being carried back to previous tax years with respect to the unused amount.
