Correct. If you want to use a traditional wood screw and have it go in easily without ruining the head, esp. one with a slotted flat head, you have to pre-drill three times or use one of those sets, and use a screwdriver that exactly matches the screw slot. Many people also put lubricant like wax on the threads. Without these precautions you can mar or destroy the slot, or the screw will not hold.
It is not actually necessary to use a tapered bit - some sets are made with straight ones. Usually these sets are made so that you can either countersink or counterbore just by going deeper.
I believe wood screws are not used much now except for fine woodworking and wooden boats, because they need too much time and care to drive a lot of them in commercial use. However some people believe only a slotted head is attractive when exposed on hinges and such.