Use AWS IAM Identity Center (federation).
This is correct. AWS IAM Identity Center connects (federates) with existing corporate identities (Active Directory or an external IdP) and centrally provides employees with SSO access to multiple AWS accounts and applications.
Employees log in once with their usual corporate credentials (plus MFA) and can switch from the portal to multiple authorized accounts and SaaS apps without logging in again. You can define a role once and assign it to multiple accounts in bulk, such as "finance gets read-only, developers get admin," and removing access on departure or transfer is reflected across all accounts just by an operation on the corporate identity side. There is no need to create IAM users per account, which also prevents unauthorized access from forgotten deletions.