So here are some "scale" pictures. First, a single servo signal:
The large gaps allow multiple servo signals to be multiplexed on a single communications link (eg the radio signal of a radio control set.) You only have to send one actual pulse at any one time, and you have enough room to send about 10 servo signals. I'm pretty sure that this is how the libraries that support very large numbers of servos on Arduino (or similar micro) work. For each timer the chip has, you can easily control up to 10 servos. Since the ATmega168 (and 328) have three (or even 6, depending on how you count), you can control more servos than there are pins. (5 channels are drawn here.)
