I\'ve set up a distribution but I\'m a bit confused about the purpose of the CNAME that can be set up in Cloudfront. Assuming my assigned Cloudfront domain is d27fwrff25jcfd
The process you describe in your second paragraph is exactly right. You create the CNAME record in your domain using your DNS provider. You then tell CloudFront about the CNAME so it knows to use your distribution when requests come in with your CNAME in the HTTP Host header.