How the RT, PCIII and TFI (DFO/Race Fueler) differ in operation

To recap, regardless of the method used, the ECM monitors the CKP, TP, IAT & MAP sensors telling it engine rpm, throttle position, intake air temperature and manifold absolute pressure and uses these values in combination with internal tables to calculate fuel delivery and ignition timing.

How the Race Tuner works
The Race tuner is a ECM programming device, it does not remain connected to the bike after the new programs are downloaded into the ECM.
The Race Tuner is used to change the values in the lookup tables that exist in the ECM to make the entire system deliver the proper fuel and spark needed to achieve the performance desired.
With the race tuner you can modify:

Air-Fuel ratio
VE Front Cyl
VE Rear Cyl
Spark Advance Front Cyl
Spark Advance Rear Cyl
Rev Limit
Warmup Enrichment
Cranking Fuel
Idle RPM
IAC Warmup Steps (RPM vs. Temp)
ECM Tuning Constants = Engine Displacement & Fuel Injector Size

If this seems daunting then you're not alone and to remedy this H-D has included a "Basic Mode" that gives you a 2 tables to modify, Air-Fuel Ratio and Ignition Timing. The software will map this information to the more complex tables for you. It's more of a shotgun approach but it's a good way to get "into the ballpark" if you're way off.
Tuning is accomplished by manipulating the table values in the Tuning Mode program and downloading them directly into the ECM.
The Race Tuner also has a Data Capture module that allows you to record data in real time from all these sensors and play it back one increment at a time. This is feature is very useful but can be very tedious if you don't know exactly what you are looking for.
The Race Tuner can modify the rev limiter as well as reset the speedometer to accommodate the 28T pulley upgrade on '02 - '03 bikes. It cannot adjust for variable pulley configurations or chain conversions.
The Race Tuner cannot reprogram the ECM back to it's stock configuration.
The Race Tuner cannot upload (read) the map (program) information loaded in the ECM. It only returns the file information about the program loaded in the ECM. This is why it's critical that you get a copy of the program loaded into your ECM from your tuner.
The Race Tuner can only be used to program one bike, the first one it actually writes a program too. It can read any Delphi equipped Harley

How the Power Commander III works
The Power Commander is a piggy back device. This means it is installed between the ECM and the EFI wiring harness. It remains attached to the bike after installation.
The PCIII DOES NOT modify any of the internal lookup tables. It interprets the data coming into the ECM from the sensors above and manipulates the signals to make the ECM see different readings. At the same time it manipulates the output signals to the fuel injectors and ignition coils to achieve the desired results.

This isn't as easy as it sounds. The PCIII has to do the following to work correctly:

Analyze the incoming signals
Determine the proper fuel and ignition advance required
Determine what signals and values to change
Change it's output signals to the ECM, Injectors and Ignition to achieve the desired result
And do it in a constantly changing environment

I'm not sure the the exact method they use to achieve their results but I'm pretty sure it's a combination reading the ECM inputs and manipulating the signal pulse width to the fuel injectors and delaying or advancing the signal to the ignition coils.

This is all controlled by map files that you or your tuner manipulate and download into the PCIII.
The newer USB version offers an accelerator enrichment function (not really needed on our bikes since that is part of the basic function of the ECM) as well as the ability to modify the front and rear cylinder independently.
The PCIII cannot increase the rev li