Q: What does an immediate change in status to 'Awaiting AE Recommendation' mean?

You are somewhat right in your understanding/assumption. A direct change after submission (or after the initial admin check) to ‘Awaiting AE Recommendation’ typically means that the Associate Editor (AE) has had a look at the paper and decided not to send it for review. This is usually because of a scope mismatch, or in some cases, the novelty and/or quality of the research/paper not being satisfactory. However, the AE can only make a recommendation. The decision is made by the Editor-in-Chief (EIC), and their decision may well be a revise-and-resubmit, a reject-and-resubmit (in some cases), or a transfer (either to another journal in the same publisher’s family or a partner journal). So, as you can see, it may not be an outright reject yet. You should wait to hear from them before planning your next steps.

For more insights in the journal decision-making process, you may find these resources helpful:

• A journal editor's insight into what happens post manuscript submission
• Who takes the final decision on a manuscript: the AE or EiC?
• Is it normal for the manuscript status to become 'Under Review' on the submission day itself?

All the best for whatever is next!