Yes, that's correct -- an auction item would go the highest bidder, while the swag items are being offered to anyone who donates (or donates a certain amount.) This could be physical object, like if someone is willing to cross-stitch or sew a pillow or make a mug, or it could be a fanfic-related item, like Ken's offer to convert your favorite story to Kindle format or a drabble set during your favorite episode.

Kathy