It looks like they've got a pretty fancy computerized dyno that automatically applies the load to the engine every 250 or maybe 500 RPM. Mine is close to 50 years old, and it requires a lot of manipulating of throttle opening and manually controlling the water inlet valve to fill the load cell. It looks like a big torque converter and applies a load to the engine by the volume of water that gets applied to the impeller. The idea is to measure the amount of torque the engine can develop at full throttle at a particular RPM, and then use a math formula to convert the torque readings to HP. For an accurate reading, it's necesssary to know the temperature, atmospheric pressure, and relative humidity, as a change in any of those numbers between runs makes the results inaccurate.
Of course, the first thing I had to do was teach my students the math they should have learned in the 5th. grade, so they could plug the numbers into a calculator. Forget giving any of them, even the smart ones, a pencil and paper!
Jerry