Yeah and like I said there is still a cache saved on the phone that unless rooted you cannot move so even though you can store apps on the sd card, it'll still eat up some of the internal memory... Only other solution is to uninstall apps. The cache is what's called the Dalvik-Cache and Dalvik is kind of a Java virtual machine and the cache helps your apps load faster.
And yes one partition is to store apps on, the rest is treated as if it's normal micro-sd card memory. Link2SD essentially takes that second partition and mounts it elsewhere, than moves the apps to that partition and creates a symbolic link so Android thinks it's on your internal memory even though it's not at all on your internal memory. Technically I don't think the author HAD to set it up this way but it could have many reasons, for one if you mount the sd card in Windows it can only see the first partition, preventing you from editing the second where all the apps are being moved to. In Linux however you can access both partitions.
There is a script called App2SD (not the same as the one in the marketplace) that actually replaces your data directory with the second partition so all apps are automatically on the sd card however that creates a few problems, for one when in USB mode no apps would run plus it's riskier, Link2SD doesn't really touch your directories except for the new one it makes making it a much safer alternative.