I am wondering if automation is what I believe it to be.
If I want to edit CC1 commands using an external device, and the midi notes are already notated, I can use automation to just edit the cc command while Cubase plays back? So it would be like recording that specific command in real time without having to play all the notes back in while also messing with the mod wheel?
Yes, this could be considered as automation.
In general, automation is a process when any parameters are moving “automatically”. First, you have to somehow define, how they should move. You can record the movement by using any hardware, you can record it from GUI (just enable Write Automation, hit Playback, click to the virtual controller, and move it), or you can draw it (by Pencil - Draw, Line, or other tools).
The parameter, you are automated, could any MIDI controller, as you described. But it could also be Fader on your MixConsole, Panorama controller, Frequency/Gain/Q of one of the band of your EQ, Attack of your Compressor plug-in, Mute button, Bypass Button, Waveform of your Virtual instrument, etc., etc. And of course, more parameters at once.