not quite, you have the right idea though. what it actually does is guess, based on the frames you give it, what each frame would look like if the clip were, say, 1000fps instead of 60fps. that's why it stays sharp (whereas frame blending gets blurry), but also why it warps things like water if not done right.
to OP, as ReedSkis~ said, Twixtor is a plugin program for either AE or Final Cut Pro. cinema tools is also a sort of plugin. In Final Cut, you click on the clip, then select open in cinema tools. the clip will open in cinema tools, and that's where you conform it. you then go back to final cut, and the clip has been conformed without you having to actually export it or anything.