Implementing Phase Accumulator in VHDL

Basic NCO operation is very simple to my opinion. Actually it's essential to have a large fractional part in total accumulator bitwidth respectively resolution. Your description is fully correct, just consider a few additional facts:

- the output resolution is the number of bits, that can be used by your design, e.g. an output DAC

- a periodic signal is achieved by allowing the accumulator to overflow. This already clarifies, that the most significant bits form the output

- a fractional part (the accumulator bits right of the least significant bit going to the output) are required to achieve phase/frequency resolution. You can try by pencil and paper method to generate a very low frequency with a virtual NCO.