This is correct - they electrolyse water to produce a mixture of oxygen and
hydrogen. The amount produced is small and is not intended to act as a fuel.
It only uses about 0.25% of the engines output.
There was a lot of research done by universities and other organizations
some 20 years ago, including NASA's Jet proplusion lab, that showed that
injection of small amounts of hydrogen into an internal combustion engine
along with regular fuel/air mixture would improve the efficiency of
combustion. What this means, is that the normal fuel is used more
efficiently and less unburned fuel leaves the exhaust as unburned CO and
hydrocarbons. But, the improvement in gas mileage was only about 10% and at
most 20% could be envisaged. Back then when fuel was cheap, it was just not
worth the effort.
But now with fuel prices through the roof, some scam artists have picked up
the idea and are selling books or kits making this sound like some sort of
miracle.
One problem, is that most modern cars have computers that control the fuel
mixture. Those oxygen sensors in the exhaust provide the input. A device is
needed to trick the computer into not doing it's job if the hydrogen
injection is to work. I would not do it on a newer car, but it would be
interesting on an old beater.
But, trucking companies are using a commercial device to save energy using
same technology - It works just as well on diesel engines. More info here:
http://www.chechfi.ca/sohfitech.htm
Graham