Yeah, you got it! It's not particularly well-communicated (no tutorial, no in-game text, etc.) but enemies that have been hit can't counter-attack - at least, not until they recover from their invulnerability.
It's a mechanic that I saw in an SNES game, ActRaiser 2, which I thought was a really cool concept. That game has a lot of other things going on (lots of different character actions and movement options) which makes for some interesting decision-making. It was tuned to be fairly difficult and character movement was very slow (from what I've seen, anyway) so I don't know how fondly it's remembered. I know I think it's pretty neat, though!