"Code Coverage" is a a relative term and it doesn't really mean execution paths (that's cyclomatic complexity, which is very difficult to conceptualize with any programming language, and LabVIEW in particular). More info here (at arond the 15 minute mark).
OK - the image is a little difficult to follow because it doesn't show that what we're actually counting here are diagrams - each of the executed pages is a diagram, and the main BD is counted a diagram, so that adds up to 3 diagrams executed. There are a total of 6 diagrams (the main BD, 2 cases in the first structure and 3 in the second), so that's a total of 3/6 = 50%. It is *not* tracing paths at the component level - it's tracing them at the diagram level. This all makes sense (it's the same method used by the VISTA Code Coverage Toolkit from oh so many years ago) - if the main BD wasn't counted, then the aggregate matrics for a whole project would be wrong.
I just got the skinny from Eli Kerry (one of the benefits of being on the ground at NI-Week 09 ) and he gave me this - I think that the colour coding goes a long way in making it more clear:
It's the green diagrams that are counted in this test case. ...and here's the coverage graphic for the 2nd test vector: