no it's not what you've said at all.

i've been trying to think of an analogy that your addled brain can understand, it's been difficult but i'll give it a go.

you have a man who is wearing a pair of pants and a shirt and you want to know what he weighs (what his mass is technically, but we don't need to get involved in that). the real mass of him in his pants and shirt, as measured on a calibrated balance is 100kg exactly. this is equivalent to an engine making a quoted power at the standard test conditions, say 100bhp at 25 degC and 1013 mbar.

if he goes on another set of scales somewhere else, provided they are calibrated, those scales will also tell you that he weighs 100kg, as will any set of scales in the world if correctly calibrated (there will be some tolerance, but not much, say for arguments sake it will be within 1/2kg so between 99.5 and 100.5kg).

he gets on some cheap scales (or ones made for gullible women who don't want to believe that they really are that fat) that say he weighs 90kg. he doesn't, he still weighs 100kg, but the scales are not properly calibrated and have a measurement error. another set of cheap scales might say he weighs 110kg. that is just because they are not calibrated - there is no correction of results at this point (although you can always calibrate such scales provided the error is repeatable - if you know that when you put a 100kg weight on them and they read 90kg, you can effectively redraw the scale so that it reads 100kg). this situation should not really happen on a dyno, but it could if the load sensor is not kept in calibration or it, or its signal, are interfered with on purpose to give false readings.

now he puts on some thick trousers, a heavy wool jumper and a big overcoat. he gets on some calibrated scales and they say that he weighs 110kg. we know that in his pants and shirt he was 100kg, so the other clothes have added 10kg so we need a correction factor to get back to the unclothed weight. that is like an engine being run with a hotter inlet air temperature than at standard conditions - it will make less power because of the less dense air (and therefore less power would be measured on the dyno) so we need a correction factor to normalise it back to what you would get if you were at standard conditions. provided that the correct air temperature is measured, the correction factor applied by the software to the dyno measurement should be accurate and the corrected power calculation is applicable. so for example if the dyno measures 90bhp and it is 45degC and the correction factor is 10bhp, then the corrected power comes back to 100bhp which is what it would make at 25degC.

now if we lie and say that our man had a concrete crash helmet on when he was on the scales at 110kg and therefore we need to take off another 10kg as well as the 10kg for the cold weather clothes, we would over correct and say that it would be equivalent to him weighing 90kg in his pants which would flatter him somewhat. that is the same as putting the temperature sensor somewhere hotter than the air the engine is taking in and therefore over correcting and flattering the corrected power output. so at the same 45 degC temperature as before, the measured power will still be 90bhp, but if the temperature sensor is put in a bowl of ready brek at 65 degC, the correction factor applied by the software might be 20bhp and therefore the corrected power calculation would be 110bhp which is falsely flattering.

the corrected power figure can be useful if you know that the measurements have been done correctly (and if everything is calibrated, including the temperature probe of course, which is another area where a fiddle could happen), but the dyno in an uncontrolled climate is most useful for back to back measured power comparisons at the same conditions. for example, you add 5psi more boost and want to know what difference it made. that would be like the man using the same set of scales and getting on with a pair of wellies on in addition to his pants and shirt and finding out that he now weighs 102kg and therefore his wellies made 2kg difference.

i hope that makes some kind of sense to somebody and helps explain it a little.