Yes, that's correct - the DME is the abbreviation used to describe the Bosch ECU (Electronic Control unit). DME is an abbreviation for Digital Motor Electronics (or Digitale Motor Elektronik in German).
By modern standards, the DME is very simple (if compared to a modern Porsche ECU for example). All the function of the DME is within the DME itself, it is not on the chip. The chip contains only reference data which is looked up by the DME to determine the Ignition timing and Injector pulsing. All the data is stored in binary format (i.e it is 8 bits per character). Each 8 bits can be represented as a HEX value (0-255 = 00-FF for those that may remember Hexadecimal from Computer Science at school?) The DME has many sensory inputs and also houses the ICM (Idle Control Module) that operates the Idle Stabilisation Valve (ISV).
When a performance chip is developed, the objective is to increase the performance, responsiveness and economy of the car by altering the reference data on the EPROM (chip). This reference data resembles a matrix where by values are looked up based on RPM, AFM voltage and other input data (such as Throttle Position Sensor, Speed & Reference Sensors, Coolant Sensor etc). Subtle changes to this reference data can alter ignition advance and/or fuel delivery to change the performance characteristics of the engine.
Hence, additional performance can be achieved especially when used in tandem with increased turbo boost, fuel pressure or fuel octane rating. However, there is no logic on the chip "" it contains only data used by the DME (may be referred to as 'operating code', but it is not 'procedural code' or software - it is simply binary reference data).
Regards,
Andrew.