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A dynamometer, also known as a dyno, is a machine used to measure RPM and torque from which power produced by an engine.

There are two types of dynos: one that is bolted directly to an engine, known as an engine dyno, or a dyno that can measure power and torque without removing the engine from the frame of the vehicle known as a chassis dyno.

Engine Dynamometer (Dyno)

An engine dynamometer measures power and torque directly from the engine's crankshaft (or flywheel), when the engine is removed from the vehicle. These dynos do not account for power losses in the drivetrain, such as the gearbox, transmission or differential.

Chassis Dynamometer (Dyno)

A chassis dynamometer measures power from the engine through at the wheels. The car is pulled up on the dyno rollers which the car then turns and the output is measured. Chassis dynos can be installed in the ground, above ground and on trailers so they can be transported.

Due to frictional and mechanical losses in the various drivetrain components, the measured horsepower is usually 15-20 percent less than the actual horsepower measured at the crankshaft or flywheel on an engine dynamometer.

A dynamometer works by absorbing the power developed by the test engine and measuring the torque required to do so. Power is then calculated from the torque and RPM figures and proportioned to a standard horsepower according to the following formula:

HP = (Torque * RPM) / 5252

A dynamometer only measures torque and RPM and power is calculated from those measurements.

Dyno Dynamometer Manufacturers

• DynoJet
  Dynojet Research develops after-market performance prouducts and diagnostic tools for the Motorcycle and Automotive industries. Dynojet's extensive product development testing required the use of a Dynamometer. Unable to find a Dynamometer to meet the needs of our Research & Development staff, Dynojet went to the drawing boards and pioneered the first single roller, inertia, chassis Dynamometer for motorcycles in 1989. Shortly thereafter, Dynojet developed a computer interface and software package and began selling the first Model 100 Motorcycle Chassis Dynamometer.
  
  
• AW Chassis Dynamometers
  Since 1957, AW Dynamometer has been the leading manufacturer of chassis dynamometers because of their superior durable design and outstanding technical support. AW Dynamometer specializes in nine different chassis dynamometer models with performance and support that is second to none.
  
  
• Taylor Chassis Dynamometers
  Taylor manufactured its first water brake (hydraulic) style chassis dynamometers in 1963. Today, Taylor has the largest world wide installed base of heavy-duty high horsepower chassis dynamometers and Taylor's dynamometers have become the industry standard.
  
  
• Land & Sea Dynamometers
  Engine dyno & chassis dynamometer systems for automotive, bike, diesel, kart, marine, motorcycle, outboard, pwc, or snowmobile dynometer testing.
  
  
• Mustang Dynamometers
  Mustang Dynamometer specializes in eddy current and electric dynamometer systems with a variety of products including Chassis Dynamometers , Engine Dynamometers, (I/M) Inspection / Maintenance Equipment, exhaust gas analyzers, vehicle safety inspection equipment, Hydraulic Test Systems, Custom Engineered Test Systems and revolutionary emissions monitoring systems called Remote Sensing.

Reference: wikipedia