Re-flashing the factory, regardless of the method, is enabling the tuner to be able to directly alter the fuel / ignition and other parameters inside the factory Engine Control Unit. This is typically done by first "Uploading" the ROM file which incorporates or the tuning data from the ECU via the OBD Port. The ROM is then modified, and "Re-flashed" back onto the Factory ECU. Some software options allow the data to be modified directly on the ECU, as can be done with either live tuning or utilising a data logging system.
This is an area which is growing in demand and services due to the fact that most late model vehicles, especially those utilising VVT, Mivec, Variable boost controls, active knock sensors etc are becoming so advanced that a simple piggy back system is crude and ineffective. This is mostly due to the vehicles running multiple map setups that vary with engine load / speed or other factors.
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