Hi Paul,
As I understand it, that is correct.
I have been participating in the beta programme and decided that there was enough there to make it worthwhile for me to upgrade to v21, so I paid the discounted advance order price. That got me a new v21 license code, which automatically deactivated my existing v20 code on all three machines so that I then had to reactivate them with the new code. I've just checked my licence which now shows one 'free' upgrade (paid in advance for v21 when it's finally released), and two machines activated with one further free activation remaining, which should be the one for the backup machine that I haven't yet reactivated. So it does appear that I still have my three activations from v20.
Also as I understand it, the v21 license will also activate v20 simultaneously, so that it is possible to have both versions installed and activated on the same machine and use whichever one is preferred at the time. I've certainly done that with earlier version(s) in the past when I wanted to keep the older one available in case of any major issues with the upgrade. I'm not certain whether the licence will allow older versions than the penultimate one, or if having both versions activated on one machine uses up an additional allocation, but I believe the answer to both of those is 'no' (i.e. last version only and no 'wasted' activation).
Fortunately I haven't experienced any activation issues with C1 (Windows 10), apart from the need to reactivate with the v21 license, but their customer technical support does appear to have fallen into a black hole of late. As I noted, the loss of the extra seat under the new licensing policy won't affect me personally, at least for the next year, but it is indicative of a 'bean counting' attitude that I find both distasteful and concerning for the future. And, for what it's worth, my other reason for upgrading was that I can't help feeling that C1 may be edging imperceptibly but steadily towards the Adobe subscription-only model, and if they go down that route they have lost me as a customer as far as future upgrades go.
Cheers,
Malcolm