yes, precisely. We have two different forms of addressing people:
du [doo] is reserved to very close acquaintances (usually after several years), friends and family. Sie [see] is for everyone else. It's just like the English you and thou.
Btw, the capital letter in Sie is no typo. It's a form of respect, like the capital L in the Lord's prayer. And it makes it easier to distinguish between Sie and sie (thou and she).
While a hello would be completely acceptable with people you address informally (i.e. with du), it is inappropriate with people you address formally (with Sie). For them you'd give the time of day: guten Morgen, guten Abend (good morning, good evening) or a general guten Tag (good day). In Bavaria we say grüß Gott, short for God bless you.
Basically, for a German to be greeted with "hello", would be like an American or Briton being greeted with "hi there!"