That's a nice concise explanation. Older covers have a few other things to note, but in general that's it for modern covers. (Cover is the stamp collecting term for a cancelled envelope - or other item)
The Lou Gehrig stamp was issued in 1989, so it's not a first day cover for that stamp. The most likely explanation is that someone sold generic covers with the cachet and the Gehrig stamp specifically for collectors to get autographed. Someone later attended the induction weekend and had the induction weekend cancel added then (The stamp was issued on July 28, 1994, in NM, so it's not a first day for that either.
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