In practice, traditional dimmers are not quite PWM as they do not generate a square wave. Instead they generate a sin wave with portions of each cycle clamped to 0.
LEDs already need driver circutry to condition the relativly high AC voltage into a stable lower voltage DC. Dimmable LEDs create a stable DC power supply from the chopped up AC power, then use the width of the active portions of the AC as a signal to drive their own dimmer logic.
It obviously wouldn't work that way when lighting a room, but what about for an LED indicator light that you look at directly? I don't know enough to form an opinion.
The "fully bright" part is a consequence of human vision. Your brain is making sense of limited, noisy information coming from your eyes. A flickering light appears brighter than the light in steady state, lots of still images shown in rapid succession look like they're moving, as far as you can tell you can perceive the full range of colour out of the corner of your eyes, and the dress could be either colour.
If the cycling of the light on and off is done at say 10kHz it's perceived as a dim light.