Yes, that's how it works. The higher the number, the smaller the UI will be. The resolutions you see are actually "looks like" resolutions, not the physical resolutions.
If you're used to how things work in Windows, then forget all about that...macOS does not do things the same way. You cannot set the resolution and scaling independent of each other like you can do in Windows. MacOS will always use the full resolution of the display; it's only the scaling that you can change via "looks like" resolutions. For the 1710 x 1107 resolution you mentioned earlier, the Windows equivalent would be a 2880 x 1864 resolution with ~168% scaling.
As for the color profile, that only affects how the colors are displayed. It has nothing to do with resolution. Pick the one that's intended for whatever you're using the Mac for (graphic design, photography, printing, web design, etc.). If you do one of those things professionally, you would be familiar with color profiles and know which one to use. Sounds like you're a typical/average user, so just leave it at the default setting.