Yeah, the way this is going to work out is kind of like a soccer tournament with a group stage and a knockout round.
STEP 1: in the first three rounds, you have to win the "mini-contest" consisting of all the teams who share your super bowl six. If you do that, then you get the honor of representing your mini-contest in the super bowl round.
STEP 2: in the super bowl, you're competing against the champions of all the other mini-contests, and you have to hope your super bowl six can hang on or catch up, as the case may be.
Is this saying that some teams will be officially eliminated after the 3rd round and only a subset of teams will compete for the prizes?
Definitely. Almost everyone will be officially eliminated after the 3rd round.
That was of course true of the old format as well. And probably any NFL playoff pool with several thousand entries.