I am pretty sure that it is using instantaneous fuel economy and not average fuel economy to calculate distance to empty. Knowing how Toyota engineers think, their logic would be that how the vehicle is being driven now is a more valid indication of what the remaining distance is than how the vehicle was driven before because it ispossible that a change in drivers or driving style will have a bigger effect on remaining distance than past driving style
The low fuel warning light only comes on when the fuel is low and does not come on with the other trouble lights when you turn the ignition on without starting the car. I am pretty sure this is pointed out in the owner's manual.