What the manual is saying is that any source upstream of the ICBM needs to have all bass management disabled (which means setting speakers to large and sub to on so you don't end up redirecting the LFE track to the mains), but if you have it between player and receiver then your receiver still needs to have its bass management set normally for use with digital sources. Your understanding is correct for an ICBM placement between Denon and Yamaha.