Nope, it's based on riding for hours until devices (typically Garmin and phone) have been charged to 100% for some time, then switching it off and feeling the drag instantly reduced. Though it's kinda irrelevant, because as near as I can tell, the change in drag when switching off when devices are fully charged, is the same as the change in drag when devices are actively charging. I'm not a EE, but my guess from observed behavior is the Sinewave isn't smart enough to guess what's happening on the device side, and just pushes full power at all times.

And for what it's worth I'm very happy with the setup - happy enough to equip an additional two bikes with the same hub. It's clear that 5-10 watts is below the threshold of significance for a lot of people. Still, I'm willing to bet that anyone that had a switch on the bars would quickly get in the habit of of switching off whenever they weren't gaining anything (ie going too slow on climbs, and when fully charged). On the other hand the simplicity of just plugging things in and forgetting about it has its own appeal too; I'm sure many would find micromanaging charge states while riding to be more annoying than a little drag.

PS - I get that this is the 'gadgets' sub, not 'touring' so it's worth noting that all my experience with the dyno has been based on multi-month tours, usually riding 6-10 hours a day. If you're reading this wondering about your weekend ride or your half hour commute, none of this really matters. Of course if this were weightweenies or slowtwitch I bet the conversation would be a little different!