Indeed that is exactly what it means. Followers are rarely that useful (at least in small numbers.)
In the ELH they have rules for having Adept followers, or PC classed followers, or even PrC follwers. However, some DMs may rule that requires the Epic Leadership feat.
So no 1st level Fighter followers for him.
As for NPC classes, I believe the 1st level counts as 1/2 CR and the second counts as 1. So an 8th Aristocrat/5th Blackguard would in fact be CR 12 (7 from Aristocrat and 5 from Blackguard)
dkilgo-
In general PC classes are really rare. Note the rules on page 139 in the DMG.
In a Small City the maximum number of Fighters there (as Fighters are the most common, tied with Rogues) is 2 12th levels, 4 6th levels, 8 3rd levels, 16 1st levels, for a total of 40 Fighters, only 16 of which are 1st.
Note that that is the maximum possible, and is hardly a realistic picture. Of course campaigns vary, and this is just using the random NPC distribution charts that are in the DMG.
Edit: Now that I have a little more time ...
Large City, Max Fighters - 3 17th levels, 6 9th levels, 12 5th levels, 24 3rd levels, and 48 1st levels for a total of 93 Fighters.
Metropolis, Max Fighters - 4 20th levels, 8 10th levels, 16 5th levels, 32 3rd levels, and 64 1st levels for a total of 124 Fighters.
Note that in all cases, Fighters are the most common of all PC classes (tying with Rogues) and this assumes the maximum on all rolls.
The chances of a Small City with said distribution of Fighters is 1 in 64.
Chances for a Large City like that are 1 in 512.
For the Metropolis chances are 1 in 4096.
Just having fun with boredom!
