I am not sure if your question is how a pilot uses it, how its rated, or how it applies to the design aspect of FS.
I will list my understanding of how it is rated to give an understanding of how its used.
To get the BHP % you want depends on temp, humidity, altitude, throttle position/rpm setting and fuel grade used recommend and rated by factory, although abnormal fuel grade is not generally factored, higher fuel grades burn hotter and can generate a higher BHP at lower throttle positions on fixed pitch, with additional prop pitch and manifold pressure on constant speed props. Even though BHP is generally a fixed reading at a given RPM, atmospheric conditions affect settings to achieve it.
Now its pretty easy for a pilot, even student pilots, to lean out and throttle adjust for a specific BHP at atmosphere. However most pilots dont even pay attention to BHP or configure to perform on that scale unless the flight is over half of the endurance of the aircraft at a given power setting; or if the aircraft is owned and fuel is paid per gallon. If you rent and rental is wet, usually its overlooked, and RPM/MP is used with EGT monitoring to set the pitch and throttle, whereas when setting BHP, you adjust the throttle, mixture and pitch to match settings to the chart according to atmospheric conditions. This is not saying its wise or safe to ignore the BHP rating under select specs as a pilot, but it is one of those things most recreational pilots ignore or rarely pay attention to as they generally keep flights short and low. Along with the chart you supplied, there are others we use to determine the final setup of mixture, prop pitch(constant speed prop), and throttle.
Pilots that work for airlines or charter/business operations who are Commercial certified must use BHP and other ratings to make their flights legal.
BHP rating:
Firstly, HP is just a measurement scale (like how we use a ruler to determine length by meters, yards, feet or inches), and is not to be confused with the HP rating even though they are used interchangably.
The BHP is a true HP rating at the flywheel of the engine or the output shaft of the engine for aircraft, just like a cars HP rating is at the axle/wheels, but unlike a car, BHP is true hp, not estimated, as a cars HP rating is checked on a rotating drum dynamometer then it is rated at the axle/wheels, it loses a few HP in the transmission of power from the shaft to the wheels, it would be an estimate, not true hp. If a car has HP rating at the flywheel or shaft, it is true. Engine HP ratings are at the flywheel or shaft, which is usually what a car dealer will advertise its HP as, even though the wheels will show less HP on a dynamometer, but only 1-15HP depending on the transmission.
There are also other places to rate HP, such as cam/crank shaft (SHP) which is not the same as Torque, where torque is a force of twist on the shaft generated by the engine HP. According to Wkipedia, 1 horsepower is the amount of force needed to lift 550 pounds 1 foot in 1 second.
http://en.wikipedia.org/wiki/Horsepower
All HP ratings are performed at a specific setting; in this case the setting is speed. RPM is a speed rating in number of times around a central point in a set amount of time. Similar to how best rate of climb is set at the angle and speed at which you will cover so much distance and climb this much in altitude over a set amount of time; normally rated by feet per minute or meters per minute.
On aircraft, the flywheel is the standard location for BHP rating using a braking dynamometer. There are also ratings for SHP (shaft horse power) which is rated for the delivery to the prop.
The reason for the flywheel, and not the propellor is because some aircraft can use different size and material propellors, which would change the BHP per choice.
I am not an aviation mechanic, but this is how I understood it when it was explained to me in my pilot training. It may be incorrect, and if it is and you have the correction, please post it and I will remove any inaccuracies in this post to avoid confusion.
And I apologize this is a little off topic, but I thought it may be relevant.
The original post actually asks how the pilot determines it, not only how to use the chart.