Not quite, LFE is a self-contained Lisp system with all the things you would expect a lisp system to have. It has been designed to run on the Erlang/OTP system and to efficiently use all the features of that system and its VM. This means that LFE has a clean interface to Erlang/OTP so it can easily be used together with applications written in Erlang. Mixing components written in Erlang and in LFE to write a larger application is straight-forward and painless.
If I could rename it then a better name would be EFL (Erlang Flavoured Lisp), which is what it is. The "Flavoured" in the name comes from that I had earlier implemented a Lisp machines flavors system on another lisp, with an english spelling thrown in as a joke.