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Yes, that drawing is rather confusing. Both relays and all the switches are drawn in their "at rest" positions. The sidestand relay is an "NC" type (normally closed). It needs one of it's two "triggers" to open it and unground the TCI box. Having the sidestand up is one of them. That closes the sidestand switch, establishes the ground, and feeds it to the sidestand relay. It's other "trigger" is the neutral light. So, the bike needs to either be in neutral or have the sidestand up to open the relay and unground the TCI box.
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