Its based on an algorithm as previously stated. I was skeptical enough to test my oil twice, at the 5K mark and then when it went off at 8300 miles. (They actually don't go off at "zero" a "change oil now" signal comes on at about the 5 percent mark). I still had plenty of powder dry so to speak, in the form of TBN but my short haul driving habits were beginning to drive up the acids anyway. I was nowhere close to being at the end of the service life. Everything else was well within specs.
During the time the oil was in the car, it would click off a percentage point maybe every 65 miles during the winter, about 75 miles during the summer. 10,000 miles is the absolute max, so it seems to automatically click off a point every 100 miles no matter what.
Ford really doesn't like inactivity--if you park your car at the airport for a few days you will see what I mean.
So, I second what Raytseng says: Since they somewhat arbitrarily truncate the upper limit of the oil, they inject a lot of conservatism into their formula. I have a harder than average service life, and I still go to 8,300. It would take a lot of trailer hauling to get the service life below 5,000 miles, I think. So, instead of extra-early oil changes, I bought an oil change for the differential instead.
I wouldn't hesitate to rely on the Ford IOLM. There's no reason to be a ninny about it though. If a good sale comes down at say, the 20 percent mark, by all means take advantage. Also, don't do like I did, run it to zero and then run around Labor Day weekend trying to get the oil changed.