Given that the servers seem to drop in population at the expected times of day, I'd imagine it's calculated by the number currently online.
Yea, same impression here, although my experience with server transfer is mostly during the early weeks, back when our guild finally settled on its correct server. When we made the last switch, it was almost impossible to transfer during peak time, everyone connected in the mornings to try.
It makes sense that the game would track people online rather than accounts. Since you do not have a way to distinguish active players from inactive due to lack of subscription, the only way you can do is to check who is logging in, and who's not. If you just go by account locked on that server, you can have a full server that ends up under used with most of the players on that server having stopped playing. In fact, that is what you will end up having once the server dance ends, since you will not be able to register on any full server, no matter what its real population is.
Rather than the number of people online "right now", I suspect it might track the number of people online "during the last 24h" or "during the last week". You still get population going down and up at prime time, since people who play little will tend to connect at that time, and disconnect later.
Oh, and another reason why it can't be just people whose account is homed there. If that was the case, the servers would constantly hop between Full and High as they'd drop to High when one person transfer off, and back to Full when the next person creates or transfers there. I think it would be very noticeable.