In theory, the low fuel light should come on with 0.9 gallons remaining, which would be approximately 3/16 on the gauge (5.4 gallons to fill from dead empty to little holes in filler neck). Once the light comes on, it stays on regardless of angle until you shut the bike down. There is a delay built in to prevent the light coming on too early due to fuel slosh, so when you fire the bike back up the light doesn't come back on immediately.
Since the MoCo saw fit to make this light a "stealth" part and hide it behind the speedo needle, it is probably best to not depend on it (especially if you ride at 60 mph a lot). I guess it would have taken a few brains for them to swap the location of the high beam indicator (not terribly important) and the low fuel light (much more important). My best advice is to learn through repeated trials just where your gauge is when you have 1.0 gallons left, and when you get to that point start looking for a gas station. Remember, some have reported only getting 25-35 mpg, so one gallon isn't a whole lot of reserve.
BTW - for those whose gauges read too high: if the dealer can't / won't fix it, there is an easier way than pulling the sending unit and bending the float rod. Adding a variable resister into the sending unit circuit will allow you to adjust the reading without ever cracking the tank open. As FR8TRN noted, pulling the sending unit on these EFI bikes is a major PITA, with many possibilities for screwing something up. http://flhrsei.org/cgi-bin/yabb/YaBB.cgi?num=1118059114/15/#29
Jerry