Yes. That is where the term comes from... but it encompasses the practice of using an intentionally "wrong" option.
From the linked article:
"FREASE: Exactly. And it's funny I'm saying this but yeah. You know, it happens. Everybody does it. Like, for example, I worked with - 10 years ago - I worked - we did these logos for a famous musician. And they had a lot of people working for them and a lot of voices. And after working with them for a couple weeks, we realized that they hated the color blue. So if we showed them three logos, we would show the ones we loved. And then, we'd do one that they wanted, but we'd put it in the color blue."
Though I've definitely also heard of people making a deliberately terrible alternate design and having a client pick it.