The tracer bullet has a hollow base. This base is filled with a compound that is ignited by the powder charge and burns for a certain length of time.
The brightness and burn time can be changed by altering the compound.
The weight of the compound is adjusted so that the bullet weight and flight characteristics are not too far off the normal round.
The paint on the tip is just paint to ID the round, it is not related to the tracer function.
What you say is correct of course. My 39 years in the military haven’t been totally wasted.