This was how I read it as well. I think it’s fair to say that, for a margarita, you should be able to taste the flavor of the tequila but not really notice the flavor of the alcohol. This is true for a lot of classic drinks, I think. With a few exceptions (martinis and many vodka drinks), the idea is usually that you taste the flavor of the spirit but dilute it enough that the alcohol doesn’t really jump out at you.