Yup, that's right.
If you read instructions for a 2WD (especially an older one like my Chevy), you'll find they tell you to set it up loose.
A loose bearing will survive indefinitely, but will "flop around" on turns (loose steering). A tight bearing will burn up, but will steer considerably better. You have to trade these off; a perfect setup has no play, but no preload either. Though there is some resistance from the grease and the seal.
I've packed both ways. They are both very messy and both work well, but the grease-gun packer seems to get grease between every bearing, just so.