Just how smart is my TPMS?

Sorry about another TPMS thread, but I've spent a good deal of time reading through what's available via the search function and have not necessarily answered my question.

I recently got new tires on my wife's '08 Prius and when I picked the car up the TPMS warning indicator was illuminated. I was in a hurry, so I went on home and figured they just skipped the initialization step. Well, after trying several times I couldn't get it to reset/initialize. I finally broke down and took it back to the "Firestone Complete Car Care" where I had the service done. The friendly fella explained to me that the right rear tire was 4psi lower than the left rear and figured that's where the error was coming from (the paperwork they handed me at payment indicated the pressure was 35psi on both front tires and 33 on both rears). I asked a few questions, but he was honest in telling me that he didn't have a thorough understanding of the system, but rather just knows how to use his scan tool.

My understanding of how the system works is that one can set the tires to essentially any pressure one wants, regardless of recommendations and/or consistencies front-to-back or left-to-right, then initialize the system, and then the sensors simply monitor for a drop in the range of 20%-25% pressure on any given tire before the light comes on. Is that true, or is the system smarter than I think it is and it keeps a warning light in place if there is a certain amount (say, 4 psi for instance) of pressure differential between the tires side-to-side?

My drive home from the shop was short, but the light didn't come back on, so we'll just have to wait and see....

Thanks!