You are correct, Low Drop Out is referring to the output voltage + the drop out voltage = the minimum input voltage. Note you need to account for any ripple. The minimum voltage at the low voltage point is the minimum the regulator needs. You almost have the data sheet figured out. The part you chose is available in many output voltages (1.2V, 1.5V, 1.8V, 2.8V, 3.0V, 3.3V, 3.6V and 5.0V). What you need to do is add the drop out voltage to the output voltage, that is the minimum voltage you need under full load. It will not boost the voltage. The data sheet is confusing on this aspect.