PEJ, you understand the instructions and Form 8606 correctly. Rolling your 401(k) over to your traditional IRA has decreased the proportion of your nondeductible traditional IRA contributions to the overall value of your traditional IRAs, resulting in a decrease in the nontaxable proportion of your RMD and more of your basis remaining in your traditional IRA(s) to be applied to future distributions. This result is dictated by law.
