You are correct; if you are using one cab set the on the amp to the impedance of the cab.
The speaker output on the amp will be in parallel for connection of multiple cabs.
If you are using more than one cab you would need to calculate the the total impedance and set the impedance selector accordingly.
If you did want to use both your cabs, a 16 ohm and 8 ohm cab in parallel gives an impedance of 5.33, so 4 ohms is the closest setting, although 8 ohms is good enough for rock and roll.