Yes you understood correctly. And it's not just the engine. The flaps, gears, various servos for flight controls, oil levels, pitots etc... a lot of various elements of the plane are monitored, and everything is saved.
I did try to alter the gauges to adapt them to the C172, when the very first version of the damage mod got released for the V-35.
The principle is similar to RealEngine: one XML gauge per system to monitor. You can edit them to alter the various thresholds inside.
But I didn't have much time to test honnestly: while I was looking in these gauges, the author announced that he was adapting them for the C172 already. So I stopped my useless investigations

Then came the Baron, the C-208 and the R-22.
Just download the package and take a look inside, you will see it's huge but not too complex.