Yes that's how it works, alternating every day keeps the body guessing and stops it from going into 'starvation' mode so the fat storing doesn't occur. It also activates a gene called SIRT1 which is meant to be the 'skinny gene', which is one of the silent information regulators which are meant to sense the levels of particular substances in the body and turn on downstream chemical reations that regulate the manner in which we respond to these substances on a cellular level. SIRT1 also increases activity in fat cells causing fat to move into the blood stream where it is used as energy. It also works to inhibit fat storage by turning off the gene PPAR-gama which is responsible for allowing deposition of fat.
The increase of SIRT1 in our bodies also have several valuable health effects as the SIRT1 gene is the 'rescue' gene allowing dying cells to regenerate themselves. It acts against inflammation and oxidative stress which the cause of a lot of diseases. A lot of people that have been on the alternate day diet have felt the effects on various health problems including asthma and arthritis. I myself have seen a big big change in my own symptoms of IBS and PMS, and it does seem to be down to the alternate day diet.