I've done a lot of searching for

1. An accurate description on how it works

2. Wiring diagram for in/out pins

All I've found are bits and pieces of info. Quite a lot of guessing found on how it works.

Best guess, I agree with, is module measures current flow for each circuit monitored and turns on light if not within range.

Any links for electric diagrams and/or description of how it works would be appreciated.

The pinout of the module can be deduced from the wiring diagrams in the ETM for your particular model. There's not a diagram of the module with the various pins clearly identified.

The function of the module is basically just a cluster of current shunts. The module measures the voltage drop through the shunt and determines if a bulb is present or not. A bad bulb or a bad connection will turn on the idiot light on the dash. Be aware that these modules are very well known for broken solder joints on the printed circuit boards. If you're having problems with false idiot lights, take it apart and resolder any iffy connection you find.

__________________
Current stable:
1995 E320 149K (Nancy)
1983 500SL 120K (SLoL)

Black Sheep:
1985 524TD 167K (TotalDumpster™)

Gone but not forgotten:
1986 300SDL (RIP)
1991 350SD
1991 560SEL
1990 560SEL
1986 500SEL Euro (Rusted to nothing at 47K!)