Butzy, that was a pretty good summary. But a couple of points.
All tomatoe varieties are in-bred. It's the nature of the beast with self-pollenizing plants. But we can use that to our advantage.
The parents of F1s are bred to concentrate, as it were, desired characteristics. They are not all small and ugly; and, in fact, many of them are pretty good tomatoes in their own right. At the same time, undesired characteristics are bred out. But the majority of characteristics are neutral, so far as the breeder is concerned. That's why, for instance, you have hybrids that taste good. Flavor is almost never a selection criterium. It just gets a free ride from one or both of the parents.
Here's a down and dirty example. Let's say you have a pretty good tomato that, for some reason, has higher pest resistance than usual. But it also splits easily. The breeder will, through selection, attempt to get rid of the splitting characteristic (or at least minimize it) while maximizing the pest resistance. Everything else will be pretty much left alone. This tomato will be bred as a line with the desired characteristics dominent.
The other parent will be choosen both to support these goals, and to bring other genetic characteristics to the table, and also be bred as a line. By crossing the two lines you produce an F1 hybrid with the total characteristics you want.
If you grow seed from an F1 you'll get a diversity of different tomatoes, ranging from as few as four to as many as 16. What happens is the F2s revert to the genetic make-up of the parents. Among the diversity can be, and most often are, fruits that are as close to the F1 as to make no never mind. There also might be a "new" variety that you really like.
Fortunately, because they are in-bred, tomatoes can be dehybidized relatively easily---often in only two-three generations, as compared, say, to the 8-10-12 generations it would take with squash.
So, all it takes is a little patience. You can produce an open-pollinated version of the F1 in only two or three years (although it might still require some roguing out).
True, most gardeners will not go through all that. And so long as seed is available for the hybrid you like it's no big deal. Unfortunately, seed companies are notorious for dropping varieties unannounced. Lo and behold, your favorite tomato is no longer available. And, of course, if you really like one of the F2s, the only way to continue it is to stabalize it as a new variety.