It is a timed actual riding test, but of course the flaw with torque sensing bikes is that the outcome can depend on the degree of rider input. Here's the test details:
In this test, starting from a standstill one accelerates the bike, and times how long it takes to cover 20 metres. According to EN19154 the power is to be calculated from the formula,
P = 2 x D x D x M/(T x T x T)
where P= power watts, D= 20 metres, M= mass of rider plus bike Kg, T = time secs to cover distance D.
For a bike and me weighing together 100 kilos, a time of 6.9 seconds to cover that 20 metres from a standstill means 244 watts.