Yup, that's exactly it. It's not really needed if you are printing ABS, but for PLA, it's almost crucial. It aids a lot when printing sharp overhangs, small details, or unsupported areas, and without one, it makes a huge difference in quality.

Generally, the closer you can get it to the hot end tip, without affecting the heater block itself, the better. You'll see that even the new TAZ6 (Mangrove) has dual cooling fans for PLA