Yes, Audi is VAG's 1st or 'premium' brand (if you don't count the specials like Lamborghini, Bentley, Bugatti, which are also made by VAG...Porsche as well although that one has a special relationship to VAG). Every new idea and engine and whatnot is first implemented in Audis, and only a year or two later in VW's at best - the secondary brand. Of course that has the benefit for VW that often the designs are by that time more tried and tested, while Audis, despite more expensive etc. have had some serious issues of late.

The third brand in VAG group, Skoda, is another story...they get to use VAG engines and such only several years after they've been introduced in Audis. However they have their own designers and can build the cars outside the usual VAG restrictions, and thus the Skodas have a rep of being the most reliable ones, despite cheapest, and have gained a very very good reputation of late plus a nice value retention too.

VAG also includes another side brand, Seat, which is yet another story...a few years back they re-released the Audi A4 from 3 years before rebranded as Seat and with cosmetic changes (called Exeo), and at the same time Audi released its new A4. The fun thing is that a few magazines tested the cars side by side with a tight race and the older design actually won the comparison in one :-)

It's nigh impossible to try and keep up with car quality and where and how each is made these days. At least if you buy a car here, it's not what you might expect.
Certain Nissan is made in England. Some BMW's are made in USA. Some Porsche are made in Finland. Many VW's are made in Czech. Toyotas in Romania. Some Mercedes in Spain. Volvos in Holland.

Hard to keep up with the stuff...with many brands only a handful of models are any more made in the original country.