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It likely works like a dynamic brake on a locomotive. Use some sort of generator on the wheel/axle and run that generated power to a resistor bank. That's the only way I can see it working, anything mechanical would heat and meltdown long term. Interesting concept but still not a 100% test of a certain road, altitude would be the biggest factor. It also only simulates pulling a load, not breaking or any other aspects.
If the sled is say a hybrid car type design it could simulate braking and towing. Regenerative breaking with the addition of a resistor bank for increased "towing force" and powered as well to test braking performance.
It still doest compensate for altitude but with forced induction that's not suck an issue, assuming they are testing ecoboost and diesel on this sled.