When the preferences are set to show time offset, is the reference GMT/UTC or European time?  Is the site clock affected by Daylight Saving time?

For example, Eastern Australia is GMT + 10, UK time is DST ie., GMT +1, Europe is GMT + 1 or GMT for DST.  I have to set my preferences to show +9 for the time to be correct.  Is this GMT+DST or Europe time without GST. 

I'm an engineer so I tend to be pedantic about such things.  It appears at the moment that I manually have to change my setting whenever DST changes in Europe or in Australia.  But having lived in UK, Europe and USA I can cope with such things.