Keith-
You're less confused than you think. The answer is Yes. The external power supply is used with the Series instruments to power the electronics (and LEDs if applicable) and carry the output signal to the pre-amp. That output can be stereo, split by pickup, or mono. The Series instruments can run on battery power, but they will eat 2 9-volts in less than 10 hours.
The little guy in the picture above is a throw back to the original, non-rackmount power supplies of the 70's. I often am playing in situations where I don't use an on-stage rig and can't run stereo anyway. So, Ron built me a mini that only sends a mono signal. Now, before any of you Series players get excited, I first asked for it in March of 2000 - it's not exactly a production model. ;-)
C-Ya.............wayne