Yep, that's correct! Idea is that although time itself is looping, the characters - including protagonist - are behaving differently, and therefore you have different interactions with them. As a player, part of your job is to figure out WHY certain things are different, as well as why other things stay the same. And of course: the rules are only guidelines, so you can modify them as much as you like to create a satisfying story.
Hope that helps! :)