Wow, I knew they rolled out some access to countdown from the ibus system, but I thought hell would freeze over before they'll allow people to track tube locations.
On older lines, they can only detect when a tube changes power circuit and the resulting blue/white spark sends a measurable pulse down the power system. In this case, yes, they have to just count trains into and out of a section.
I learnt this by chatting to a TFL engineer in a pub, he designed the signalling systems equipment.