just like to add to this.
Airflow on a dyno is not always an issue. As long as you have a powerful fan all is good.
Alot of people get misguided by RAM air effect or airflow. The amount of airflow required to physically force air into an engine is phenominal. Only at speeds of well over 150mph does ram air really start to take some effect. Even then, that effect is absolutely minimal.
You can read books on this stuff.
Therefore the engine is more than capable sucking in the amount of air that it needs to generate maximum horsepower/torque.
On a dyno the temperature of the air going into the intake system is what's important. Also the coolant temperatures are of most importance.
As a base test a car should be driven on the road and through the OBD port you can retrieve live information as to what the air intake temperatures are and what the coolant/oil temperatures are. On an M3 you can even have top and bottom hose radiator temperatures.
If, on a dyno that live information is the same or very close then a dyno session is highly likely to give you the correct reading.
The ECU will fuel as it did on the road and have ignition timing advance also exactly the same. Remember, the ECU fuels and advances or retards ignition timing based on the information it gets. It gets information from the sensors and if they are reading correctly then the conditions are no different on a dyno as to what they are on a road.
As far as getting power out of these engines from chip tuning - it's going to be limited.
What ever is possible, be it 10 bhp or 20 bhp, what ever it makes on a properly cooled dyno session it will replicate that on the road.
There are companies claiming some silly BHP from these engines already. I don't believe this personally. The E46 M3 was only ever capable of making around 12 bhp in reality from chip tuning but so many companies claimed 30 bhp (impossible). Even with ignition timing advanced to the absolute limit there was only ever 14 bhp.
What alot of tuner fail to realise is that the closer you reach to detonation the less difference each increment in ignition timing is going to make. As you advance timing further power actually starts dropping off before detonation occurs.
There is usually very little risk of damaging an engine with only a small amount of ignition timing advanced especially since there are knock sensors in most modern ECUs
What most people will feel from a chip tune is not outright BHP or torque. It's the adjustment made to the throttle map. Basically the responsiveness combined with the small increase in power makes the engine a little more driveable. Throttle maps will often be smoothed out a little more.
More aggressive chip tunes will have more ignition timing advance but you will have to use high octane fuel all of the time.
In isolation a chip tune has limited effect. Where is really comes into it's own is when done in conjunction with other modifications like headers or far more efficient intake systems. This is when more ignition advance may be required in places to take advance of the better flow charactersitics of the engine due to the upgrades.
A chip tune on standard car 'can' make a huge difference sometimes though. This I have seen many times on 'some' cars. If the engine has certain characteristics where it makes too much noise under a certain amount of load or loads then it may not pass the regulations for pass by noise. It may also be emissions related under certain loads.
If this happens then the manufacturers have no choice but to adhere to the rules and have to adjust the map to suit.
This may require retarding ignition timing in places. Doing this will create a flatspot. It will clearly evident to anyone who can look at the ignition maps.
If the map is simply smoothed out there will be gains to be had in those areas.