It isn't. This is simple two-level scheduling that could be found in textbooks of the time. You've quoted a discussion of the low-level scheduler, a.k.a. disp

It isn't. This is simple two-level scheduling that could be found in textbooks of the time. You've quoted a discussion of the low-level scheduler, a.k.a. dispatcher. If you read just 3 pages on from that quotation, you'll find a description of the mid-level scheduler that dynamically adjusts priorities (in two priority classes) according to whether threads consume their entire quanta; a rather simpler dynamic variation mechanism than those of some other contemporary operating systems, which did things like calculating decayed estimates of recent CPU usage over the past few seconds, and certainly not "magic". (Some operating systems have another level on top of those low-level and mid-level schedulers of high-level schedulers, that deal in things like scheduling jobs in batch, or performing whole-process swapping. OS/2 doesn't have that.)