The PCM monitors the alternator through the red (L) and gray (F)wires

The L-terminal circuit from the generator is a discrete circuit (a discrete circuit has no splices and only one source and destination) into the PCM.
The PCM applies ignition voltage to the generator L-terminal circuit.
A small amount of current flows from this circuit through the generator windings to ground to create a magnetic field which starts the generator process.
When the generator is at operating speed and producing voltage, a solid state switch for the L-terminal circuit in the generator opens and the PCM detects that the initial startup current flow has stopped.

The PCM expects to detect low voltage on the L-terminal circuit prior to the generator rotating at operating speed and conversely expects the circuit to be at ignition voltage potential when the generator is operational.
When the PCM detects a fault (circuit shorted to ground, or circuit shorted to voltage), the Driver Information Center will display Charging System Fault.

The generator has an input to the PCM called the F Terminal to indicate the percentage of total capacity that the generator is producing.
This signal is detected by the PCM as a duty cycle from the generator and displayed on the scan tool as a percentage. The PCM can monitor the generators output under all conditions to determine if it is functioning normally.

When there is low demand from the electrical system on the generator, a low duty cycle percentage will be displayed. As more accessory load is placed on the generator, the duty cycle output detected by the PCM will approach 100 percent.

A normally functioning generating system will never reach 100 percent as indicated on the scan tool.