This is precisely how it works. If you deposit $1000 DAI, you'll notice your available alUSD is 500, over time as the yearn vaults are harvested you'll notice your available alUSD borrowable balance increase. These tokens can be "borrowed" without incurring debt. So if your alUSD balance becomes 510 alUSD, you could transmute that 10 alUSD for DAI 1:1 or swap it on the market (like CRV) for nearly 1:1.