You've got it basically right. For everything but the simplest of parts, it's usually best to use the CAD software to create a model, and CAM software to turn that model into tool paths the CNC machine can execute. This is in the form of G-code, which is basically a text file, that the CNC machine loads and then runs line by line.
I disagree with the earlier comment about every CAM program having CAD functionality. Some do, others don't, and the best of them usually specialize in one or the other. While most CAM programs have some limited capacity to draw lines or whatever, that's usually for simple things like defining machining regions, and isn't capable of designing mechanical assemblies or other complex designing tasks.
Andrew Werby
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