Yes, that's what it means. You could use either an On/On or On/Off depending on how you set it.
You can do all three pickups with a SPDT if you simply use the other side of your 5-way switch to route the coil junction wires to the SPDT. If that doesn't make sense to you, then just continue what you're doing and forget I said anything.
You can do all three pickups with a SPDT if you simply use the other side of your 5-way switch to route the coil junction wires to the SPDT. If that doesn't make sense to you, then just continue what you're doing and forget I said anything.