Yes a lightning rod does work by getting hit and shorting the lightning bolt to the ground rather than through your house. This only protects against direct strikes.
If lightning strikes your house, it goes from rod to ground. Of course having a large electrode on your house increases the chance of it striking in the first place...
The lighting rod seems to work for a couple of pretty common reason. The reason it really works is because it will give to electricity to the rod at the right time.
