Yes. I often like to press Space (Quick Look) to verify the image before posting - especially as it is very bad to make a mistake and post the wrong image. You can, if you prefer, add another Type a Keystroke: Return actions.
"conforms to" is talking about the type of a clipboard (or probably more accurately, that at least one of the flavors of data on the clipboard is of a particular type). The public.image is a Uniform Type Identifier, which is a hierarchy of type information. For example, a PNG image is of type public.png, which in turn is a form of type public.image, which in turn is a form of both public.data and public.content, the former is the base physical type for byte streams, and the latter is the base type for all document content.
So basically, it is just asking if the clipboard is an image, which actually is exactly the same as "The clipboard has image" condition.
Really exactly the same as Keyboard Maestro checks for conforms to "public.image" for that condition.