By the ifly software. There are a number of aviation specific NMEA sentences e.g. GPRNB, GPRMC, GPGGA, GPBOD, GPAPB etc. The iFly software certainly gets current position info from the GPS, but it uses this in conjunction with the flight plan data to determine and send the correct information (sentences) to the Autopilot.
On the iFly 7xx units these sentences are selectable in the application for output via the USB port to an EFIS/HSI/Autopilot. iFly has also coded some logic to anticipate/smooth out the turns so turns commanded arent too harsh/acute when each waypoint is passed.
The discussion is about understanding whether there is a viable possibility of getting same from an Android Tablet. Currently on Android and iPad versions NMEA output is only available via WIFI to an iLevel device. WIFI Less reliable than hard-wired and about a $600+ gadget vs $25.
Some good sunlight readable android devices appearing and it would be nice to be able to panel mount and hard-wire them.
Hope that helps clarify what the discussion is about.