One of the (minor) details about XFR that I recall from AMD slides is that it moves clockspeed in 25 MHz increments.
My guess is it does 2d algorithmic analysis of the chip's clockspeed based on temperature and voltage. It will likely do in real-time what we overclockers do over hours of painstaking testing and tuning: observing temp vs. voltage and adjusting clockspeed (and voltage) upward where possible until temp + voltage thresholds are met. Then it backs down. It could be a little complicated because it will be a series of formulae that vary in two variables, not just one.
Only thing I can't figure out is: how will XFR know when failure due to high clock/low voltage is imminent? Unless it has a preprogrammed table of clockspeed/voltage combos (which it might), it will never be able to run the razor's edge. Traditional overclocking requires you to push your chip until it starts to fail, and then back clocks off from that point. That is, if you want the most out of your CPU. I'm not sure how the XFR system would be able to do that without bringing down the whole house of cards.