Yes.

 

I’m not sure how it alters “heat” function for the same

Indeed the function is more obvious when reducing AC to improve mpg. When heating, all it does is reducing the fan speed, to save some energy and maybe, if it’s really cold, keep more heat for the engine itself, helping it to work at optimal temperature. But frankly, in any case, the effect on mpg is at best marginal, if any. (Not to mention the numerous occasions where it gets override anyway, because of defrost or too low cabine temperature, for example)