Yes, you have it right.
With the micro size sails the CE of the sail is within few inches of the mast.
The only way you can get "upwind drive" is to put the mast foot absolutely at the back of the mast box, and in many cases that still will not be far enough back.
I made a mast track extension to do some testing and I feel I proved (at least to my satisfaction) that moving the mast foot further back until it "balances" the CE of the tiny rig over the CLR of the center fin/centerboard/dagger board really improves the upwind capability when using the micro size (< 2.5 m2) rigs.
If the CE of the rig stays in front of the CLR (unless you rake it back so much it loses most of it's drive and power) the only way you can go is across the wind on a beam reach or very slightly upwind.
I have GPS data that supports these tests.
I sailed from a known point on the beach, on an Aero with a center fin, and the added on mast box extension.
With a 3.3 m2 Sailworks Retro Ripper, I could sail about 30 meters above a fixed bouy.
With a 2.5 m2 Sailworks Retro Ripper, I could sail to the same bouy, but not above it.
With a 1.7 m2 Sailworks Retro, I was about 15 meters below the bouy.
Not the most "scientific" test methodology, but I repeated the courses at least twice and came up with very close to the same results each time for each little rig.
So, if you can find a board where the mast foot can be moved back until it's over or behind the LE of the center fin/centerboard/daggerboard,you can teach tiny sailors to sail upwind quite nicely.
If you can't get the CE of the tiny rig back over the CLR of the fin, slightly above a beam reach, and lot's of complaints about getting "down winded" are about the best you can expect.
The tiny sails don't need much of an insert in the deck as they are really light. so you can pretty easily have a board "modified" by the additon of a 8mm insert (like the SUP's use) that's further back than the back of the mast box.
Hope this helps,