Yeah that's basically the long and the short of it Snookie.
It's a way to try to ensure that if you cause someone's product to become dangerous for consumption they can't sue you. I'm not sure I've ever seen one. All of the companies I've ever received product from was required to show a level of insurance on the business they did with us that way if they adulterated our product or caused our run to fail the amount of the damages would be transferred onto their insurance.
Basically what a hold harmless document would have done for them is if they caused our product to make someone sick or die or if their product ruined our production run we would have no action we could take on them... of course it's all in the scope of the document. It might spell out that if it is a product quality issue that they would be held harmless but not cover product safety.
If someone is giving you one of these then I'd be wary of them... they may not have a good track record in food safety or quality in some way.