That's correct. If you use the command:
convertlit book.lit
it will "explode" book.lit into a folder containing the Open eBook source for that book; an XML "package" file called "book.opf", and a number of HTML source files.
If you want to use convertlit to simply remove DRM from a book, and generate another LIT file as its output, use the command:
convertlit book-with-drm.lit book-without-drm.lit
This will create "book-without-drm.lit" as its output rather than producing the OEB source.
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