You're right about what these connections mean when you turn them on/off in connection manager.
If both Mobile Network and WiFi are both on, and if you have EDGE or 3G with the BB symbol, and also see a WiFi network in your status and the WiFi icon is solid white, then WiFi is used for apps that do not require your mobile network.
So, for example if you were to have both connections active as I've mentioned, and used your browser, you would be only using the WiFi connection, and this would behave the same way even if you turned off Mobile Network.
But if you were to use and app like Google Maps, it would only work if Mobile Connections is enabled, because it requires this for its location triangulation and will not work without Mobile Connection. (I can't say for certain, but I'd expect that some of the Google data would still use the WiFi connection for the map data).
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