Yes, private entries can only be view by a logged in user that is registered with the site which is a WordPress user.
To answer you followup question, just put Connections on a page and mark it private and set a password and set the entries to public. No user management required. Only individuals with the password can view that page and therefore Connections. Alternatively, you could create a single user and distribute that user/password and set the directory to require login and leave the entries set as as public. I hope that makes sense.