Hi Abhishek,
Yes your understanding is correct.
The value mapping is xml does not define the source and target but when you use the value mapping object you can specify what is your source and target. Value mapping can convert/map value1 to value2 or value2 to value1 depending on how it is used.
In your case when you give source agency as UK and source schema as "Food" in your mapping then it will translate Aubergine to Eggplant and Coriander to Cilantro. if you change the source agency to "US" then it perform the operation other way around.
Hope this help
Harish