Yes, it will approach the first unit towards the second unit taking as many steps as you put as the 3rd argument, like this:
call UnitApproachUnit(udg_missile,udg_target,udg_step)
Then if you do the next step where you'll modify the function, it'll return if the unit has reached its destination. Like this.
if UnitApproachUnit(udg_missile,udg_target,udg_step) then
(reached destination)
endif