From what I read of these boards, here's how it's supposed to work: You're at your resort bus stop, along with a lot of other folks. A CM is there with a clipboard and walkie-talkie. Once there are so many people at a bus stop who want to go to the same park, the CM is supposed to call and get a bus right away to reduce your wait time.
As to whether bus on demand is really in operation or not: We were at WDW end of June, stayed at POFQ. Bus service wasn't too bad, except for the day we were going to Animal Kingdom. The bus stop was crowded with people, most of whom were also going to Animal Kingdom. 4 buses to MK came, 3 for MGM, 2 for EPCOT and 2 for Downtown Disney, and then finally a bus for Animal Kingdom. We were there a good 45 minutes, maybe longer. There was a CM there, making notes on his clipboard, heard everyone complaining, esp. when all the buses for MK came (2 in a row, both empty, no one got on at our stop either). Once the AK bus came, it was filled to standing room with all the people at POFQ. The bus only stopped at 1 stop at Riverside, could only fit maybe 5 more standees, and then it went directly to AK. I'm assuming since the buses pick up at POFQ first that all the other folks waiting at Riverside had to wait even longer once our bus was full.