We estimate the maximum FPS the processor can sustain and the maximum FPS the graphics card can sustain in each setting, then compare those limits directly.
Limit Factor formula: (stronger - weaker) / stronger. Example: if CPU ceiling is 200 FPS and GPU ceiling is 140 FPS, then GPU limits CPU by 30%.
CPU Limits GPU means the processor ceiling is lower. GPU Limits CPU means the graphics ceiling is lower. Balanced means the FPS ceilings are close enough that the gap is negligible.
The displayed percentages are derived from FPS ceilings, not generic utilization heuristics.