Davmware,
You are correct. The time is counted from when the user's session is first handed out by the connection server. If you login at 7am, disconnect, then come back and sign back in at 10am, you're now three hours closer to your timeout.
Whereas, if you had logged off instead of disconnecting, then logged back on at 10am, it would reset that timeout as a new session is now being delivered by the View connection server.
It's a little bit of a misnomer how they name it without any description.
Think of it as more of a timer to limit the lifespan of a single user session.