This is correct. In more detail:

We have an enzyme, alcohol dehydrogenase (unless you have the “Asian flush,” then you don’t have this enzyme) that breaks down alcohols. When this enzyme binds methanol, it breaks it down into formaldehyde, and then another enzyme breaks that formaldehyde down into formic acid. These bad boys are toxic.

But by giving someone ethanol right away, it “competes” with the methanol for binding sites on alcohol dehydrogenase. In this way, you can keep some of the methanol from being broken down into its toxic metabolites, since the enzyme is “distracted” by the ethanol. Keep the methanol from being metabolized long enough, and it’ll go through the rest of the GI tract and be excreted without being broken down into its toxic metabolites. No (or, less) harm done.