That's the way I have interpreted it (on top of brood frames). I believe the theory is that they drag it through the brood nest and out the lower entrance for maximum effectiveness. I put a shim between (what I think is) the topmost brood box, then put any supers on top of that. (Keeping in mind that they also say to take off honey supers when applying Apiguard.) I put a piece of duct tape over the opening in the shim to prevent them from just carrying it straight out.
So far my only problem was that I had one hive propolize the bejeezus out of the open space created by the shim. I had to chisel the shim off and scrape the tray out. Other hive: just a bit of burr comb. Go figure.
“The keeping of bees is like the direction of sunbeams.” -Henry David Thoreau