@mos_8502 Pretty much. And along the way make a million policy decisions for what you want your distro to be. What libc options does it use, what filesystem layout, what default kernel config, which packages with which options, does your package manager support easily recompiling with different flags, etc.
I'm told Gentoo is a good example at one end of the spectrum, a source-based distro (where technically every install involves building from source with the exact bespoke flags and configs you desire, although these days there's a binary cache for the "common" build options). At the other end of the spectrum is probably debian and fedora, very binary-oriented distros where building packages and installing them are two very different sets of operations.
Oh and you'll also need to make yourself an installer for your distro once you have a package set, although these days I'm told you can do that pretty easily by slightly customizing the Calamares installer.