It's the same battery health that would show up with an official hardware/software diagnostic.
That being said, it's only an estimate. Some have reported it's gone up a percent before. Determining degradation of a battery isn't like measuring the volume of liquid in a fuel tank. It's estimated based on mathematical models. All they can do is sample the conditions in real time and take a good guess as to how much capacity is left. Especially with older batteries that have been through a lot of use, that estimate can be way off. A lot of people report that older batteries often drop quickly from maybe 60% to 20% remaining charge, and that's probably because the battery health estimate is off and the battery management comes to the sudden realization that there's less charge than anticipated.
And there's probably way too much obsessing over this number. Loss of original battery capacity is inevitable from simply using the battery. Apple says for newer iPhones it's 500 charge-discharge cycles until it's expected to be at 80% battery health. If there's 300 cycles a year for someone who uses the phone a lot, assuming a linear degradation it's expected to be a loss of 1% a month.
There might be some ways to exponentially increase the longevity of the battery, but that seems really obsessive when it comes to a battery that Apple is currently charging $29 to replace.