Yes indeed, the records in Settings > Companies > Companies are for your companies. In most cases, there is only one. If you work in a group that has say one mother company and several subsidiaries, then you would find them there. But your contacts, customers, prospects, suppliers,... are to be found in Sales > Sales > Customers or Purchase > Purchase > Suppliers.

If you made the mistake you describe, you will want to make sure that the companies that you added in Settings > Companies > Companies are also in Sales > Sales > Customers. (In fact you are lucky because creating a company also creates a partner). If it's the case, then you can just go back to Settings > Companies > Companies and delete the companies that are created there. Their corresponding record in Sales > Sales > Customers will survive.