I've got an elderly "Go-Power" water brake dyno that bolts onto a bell housing. It resembles a torque converter that's filled with water to put a load on the engine at whatever RPM I choose, and the throttle is advanced gradually until it's wide open at that speed. The torque the engine makes is recorded, and a fairly simple calculation is done to determine horsepower. Correction factors are included for barometric pressure, air temperature, altitude, and relative humidity. Then the RPM is raised by 500 RPM and the torque is measured again- - - -"rinse and repeat"! Then a HP and torque curve is plotted on graph paper. Changes in ignition timing, cam timing, and/or carburetor jetting will result in different HP and torque measurements. By the time an engine gets thoroughly tested, it's pretty much "broken in" (or just broken!) before it ever gets its first road mileage. Yes, I've blown up a few engines on the dyno!
Jerry

"It is better to be silent and be thought a fool than to speak and eliminate all doubt!" - Abraham Lincoln
Cringe and wail in fear, Eloi- - - - -we Morlocks are on the hunt!
There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self. - Ernest Hemingway
Love your enemies and drive 'em nuts!