So, are the Nagura stones used to generate slurry that will in effect, change the "grit" (for lack of a better term) as you progress?
Yes. It's really cool cause you keep the same stone, just change slurry. It is a little more troublesome if you aren't close to a sink since you need completely wash off all the previous slurry before moving to a finer one. It also leads to more experimentation, as all the nagura have different characterstics despite being from the same strata. If you see Gamma's post he has a bunch, and I am sure he has a select few that are head and shoulders above the rest. Or, he may have a set for softer steels, others for harder steels, etc. Really bad for those with collector mentalities.