The way I understand it is when adjusting the RPM setting, you change the angle of the propeller blade, making them take a bigger "bite" in the air, thus making it harder to rotate and in turn reducing the engine crankshaft RPMs. A lower RPM at the same MP setting will save fuel because there are less explosion in a given time.
A car engines RPM is controlled via the throttle. In AH the engine increases RPM via the throttle but also the RPM function.
Partially true. The propeller model in AH is a idealised model of a constant speed propeller. The way a constant speed prop works is by automaticaly adjusting blade pitch to maintain a consatant RPM.
Sit on the runway and turn the RPM all the way down and push the throttle full up....only a small increase in RPM occurs.
Then turn the RPM up and the engine will max out (not wep).
Again partially true. Take a F4U-1A out. Apply full brake and watch the MP and RPM setting. Slowly opening up throttle, you'll see the RPM increase until it max out at 2700RPM. The MP at this point is about 30". Continue to open throttle and MP will max out at 51" and RPM are still at 2700.
If you go back and re-read the 1st part of my post, you'll notice that I said increase blade angle so they "bite" more. What it does is increase the AOA of the blade. It increase the "lift" (or pull in this case) but at the same time it increase the drag the blades generate making them harder to turn. The max design speed for the engine being 2700, the blades adjust their "bite" to maintain that RPM, also providing more pull in the process.
Now maintaining full MP, lower the RPMs. The MP stay where it is down to the point where the supercharger is unable to provide enough compressed air to maintain your desired MP(remember that a supercharger is driven by the engine, so the lower the RPM, the lower the volume of compressed air).
As for fuel savings, a P&W R2800 18 cylinder produce 9 explosion per crankshaft rotation. @2700 RPM, that add up to 24300 explosion/minute(or a whooping 405/seconds!)
The same engine @2400 RPM it's 21600/Minute. At the same(or close to) MP setting, you can easily see where you save fuel.
The very same principle apply for all the planes in AH save for the WW1 planeset and the storch because they are equipped with a constant pitch propeller.
edited for clarity