No, that is not right.
do_ldap_lookup is simply a flag telling the server to do a lookup.
Form Field is the field to do the lookup on. This defaults to sponsor_email though some people will use a full name or phone. It just needs to be unique on your server.
In the LDAP Server section it is going to ask for the field on your server to match our field against. This is often 'mail'.
Until you get past the 0 bug, I would set a high number here (100).
The Attribute Matchings is for extra fields to get placed into the user object on save. This is so you have a permanent relation to the sponsor. Since you are matching on emails as it is, you do not need that line. A common entry is:
sponsor_name | cn