Frue, welcome. Yes, that's pretty much the way that the crossover works, except, as Jason pointed out, the frequencies are steeply rolled off above and below the crossover frequency rather than being completely cut off.
To avoid some confusion, Onkyo did away with the "large/small" language a few years ago and your 605 uses "full band" instead of "large" when there's no crossover. Setting a crossover frequency has the result of the former "small" setting.
My M22s are crossed at 80Hz to my EP500, and this gives excellent results, being high enough to take a significant low bass load off the M22s so that they can play higher frequencies a bit more cleanly while the sub handles what it does best. On the other hand, 80Hz is low enough so that the sub isn't easily localizable when playing those lower frequencies.
