How does Apple Watch running iOS26 calculate Maximum Heart Rate

There are two options for heart rate zones with Apple Watch: Manual or Automatic. The description for the Automatic method reads, "Automatic heart rate zones are calculated using the heart rate reserve method. Max and resting heart rate values are updated on the first of every month."

Does this mean it is measuring and monitoring my Max and Resting heart rates and then setting my ranges based on that, or does it mean that it is running my age and weight on the first of each month to determine?