Yes, you can exclude played sims/households, active or non-active. But it's not an all-or-nothing type of mod - you can also set percentages on a lot of things (ie, 20% of the available YA population will be eligible to get married, or 50% of houses should remain empty, that sort of thing). Nearly anything can be adjusted or tweaked.
You might consider making a test save and seeing what it does out of the gate for a few game days so you can get an idea of how you want to set things. I made the mistake of not adjusting any of the settings at first and ended up with baby anarchy, like Ellupelluellu. Once I started figuring out where I did or didn't want caps on things it became a lot more helpful.