What you described is basically what I had always assumed to be true here as well.

In the link to bookshop's post above, she references this comment in response to someone who said that fanfiction is not currently legal. She also references this bibliography post in fandom_lawyers.

And see, everyone sounds so confident on either side, it's hard to tell. And in practical terms, it seems that whatever the technical words might be, fanfiction (as long as any claim is waived/profit forgone) is effectively legal.

LOL, hence my usage of "grey area". =/