It can actually tell if a bulb is failed even if you havn't actually turned on the specific bulb. When you first turn on the ignition, it sends a small pulse of electricity to every bulb - not enough to illuminate the bulb, but just enough to pass through the filament. And it is for this reason why if you retro fit LEDs, you need to solder in an appropriate resistor - the electronics geeks can work out the specific value of the resistor required.
