Engine Braking
When the engine is spinning with trottle closed, it has the tendency to slow down, mostly because of the compression effects in the cylinders. A coefficient is used in combination with an offset which generates a negative torque. This effect helps a lot in braking for F1 cars, and most other cars. You can feel the effect by driving and letting go of the throttle and feeling how fast the engine tries to brake the car (the rolling resistance of the tires will generally be a secondary effect).
We need to understand what is going on within the engine when a driver lifts off the throttle and the subsequent effect that has on other aspects of the car. Unlike in road cars the driver in an F1 car does not leisurely lift off the throttle and delay the braking phase. Instead the driver may be at near maximum revs, when he will simultaneously lift off the throttle pedal completely and hit the brake pedal hard for the initial downforce aided braking. During the braking, the lower gears will be sequentially selected, further peaking revs all the time as the car slows down. This sudden closing of the throttles blocks the inlet to the combustion chamber, but the pistons in the cylinders will continue to pump up and down at a great speed. This creates huge stresses inside the combustion chamber and the vacuum created will suck air past the piston rings (so called blow-by). This will rapidly slow the engine, creating too much engine braking effect, which in turns creates stresses in the drive train and over-brakes the engine. The excessive engine braking effect will make the car nervous on throttle lift off, regardless of any subsequent aerodynamic effect. So engine manufacturers find different solutions to ease the stresses and braking effect of the driver lifting off the throttle by changing the setings in engine torque map.
In the past there were several different engine strategies in place and the driver was able to change off-trottle overrun setting to tunes the cars handling, and driver switching between teams found the change in overrun settings needed some adjustment to both their driving style and sometimes with the engines settings.
Renault engine for example runs throttle open 50% on the overrun (but no fuel injected or spark), this both eases the blow-by, reducing the vacuum effect inside the pistons and stress issues, it also useful for cooling the exhaust valves. This is what's best known as cold-blown mapping.
Mercedes High Performance Engine manufacturer have their solution, this is the so called fired or hot overrun. When the driver lifts off, fuel continues to be injected into the engine and spark fired within the combustion chamber but ignition was delayed as much as 45%. This offsets the engine braking effect created by the engine, giving a smoother transition from on throttle to the overrun when off it and again reducing the vacuum effect inside the pistons and stress issues. As a result this means there is less engine braking effect. This gives Mercedes the freedom to define braking bias and KERS charging, without having to account for engine braking.
Engine braking in F1 (talked a lot after introducing comon ECU in Formula One and abolishing "ENGINE BRAKING" during 2008) is really short for a lott of things the active differentials and engine management doing under braking. Firstly, hard on the brakes and the differential is locked to stabilize the car in yaw - Honda attempted to do something similar with the front a few years ago, but it was banned.
Secondly, the engine management was thought to allow tuning of the brake balance corner-to-corner, in that the off-throttle fuelling of the engine too could be altered to provide full engine drag or none to the back wheels only, changing the brake balance considerably. The cars "knew" where they were on track via sophisticated GPS systems.
Finally, the system could detect the onset and offset of rear wheel lockup under braking and give power to the rear wheels and control a differential slip or input to individual tires, although nobody ever confirmed this. If control system detects any rear wheels blocking during braking, engine management blips throttle to prevent it.