Yes. The recovery is essentially the software that's running the show when the actual android OS is being replaced. It backs up your phone's firmware, does the factory reset and installs the new firmware.
So when you use ROM Manager, you're basically generating a list of instructions for the recovery software to carry out once you turn off the android OS and boot into recovery. Its a more user friendly way of doing things that inputting the instructions into the recovery menu directly.
It's very easy to set up though, just pick the very first option in ROM Manager to install it.
And, it's important to know that, should your phone ever get stuck whilst booting (bound to happen once or twice when you flash firmware
), you can boot the phone whilst holding Power + Volume Down to boot into recovery and fix things from there.