I can see setting create=false in the tree view, as it removes the create button at the top left.

But what does it do in a form? Does it do the same in the case where a menu entry direct pops up a form?

So far I've only used menu entry -> tree -> form.

Also, the Odoo API doc only mentions it relative to the tree/list view. On the other hand grepping through the Odoo sources reveals it being used on forms.