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With the PnP version of DnD, you're pretty much right on. If there are multiple players, they are pretty much limited to what the DM can maintain. If the DM is comfortable running more than one party, they may allow it. Otherwise, it's a one party scenario. Using BG for an example, it would be like you and one of your friends are playing the protaganist, hero type, and Imoen. Then you meet up with a couple of other friends playing Khalid and Jahiera. All the stuff that you would tell them to do, the person playing the respective char would be telling the DM; "I'm doing this," etc.
While I've never actively participated in the Roleplay forum, and am not sure about the rules, you are basically right on that it is a story told by many authors, instead of just one. There is a basic premise set up at the beginning, or maybe in chapters, and people play according to what their character would do, as opposed to what they would do. Note: All posts in that forum should be in character, and as I said, I've never actively participated, so I'm not clear on how you join a session.
Hope that helps some.
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