Yes, you're merging districts and taking half of those seats and using them to create a proportional result. It's similar to the proportional effect you would get with an MMP system, with 50% top-up seats. The difference with this system is that you can make the regions larger without making the ballot or the electoral process more complicated. With MMP, as the region size increases you're required to list more candidates on the ballot. With DMP, citizens never see how big the region is by looking at their ballot alone. Their ballot would look the same whether the region encompasses five MPs or a hundred. In this way, it makes the process simpler.
For example, in Atlantic Canada, for parties that receive more than the threshold, the level of proportionality should be pretty precise. I recommended using a district threshold of 5%. That's why in this case the Green Party is one percentage point off their deserved representation. The way I've used the threshold, it's a local veto rather than a regional veto. By doing that, if a small party performs fairly well in the region in enough local districts, it can still receive representation, whereas if you establish a regional threshold of, say, 5%, you bar those parties from winning representation until they hit that benchmark. The benchmark is slightly different from what you're used to seeing, but it's roughly the same idea.