Sort of. If you’re using wg-quick then it serves two purposes, one, as you say, is to indicate what is routed over the link, and the second (and only if you’re setting up the connection directly) is to limit what incoming packets are accepted.
It definitely can be a bit confusing as most people are using the wg-quick script to manage their connections and so the terminology isn’t obvious, but it makes more sense if you’re configuring the connection directly with wg.
Ah, ok. You’ll want to specify two allowedip ranges on the clients, 192.168.178.0/24 for your network, and 10.0.0.0/24 for the other clients. Then your going to need to add a couple of routes:
You’ll also need to ensure IP forwarding is enabled on both the VPS and your home machine.