FotoSync uses multiple techniques to determine what has changed and what "direction" to apply the change. There are two basic questions that are answered to help determine how to apply changes.
When a change is detected, the location that made the change last is used as the "master". Since every time a change is made is recorded in FotoAlbum and the FotoTime website, a determination can easily be made as to which change was made last. However, this assumes that your clock on your PC is set correctly, which is why FotoSync verifies the time on your PC at the start of the sync. If you get a warning about your time being incorrect, then most likely your clock is set wrong or your time zone is not right.
FotoSync takes into consideration the time difference that may exist between your PC and the FotoTime website and is able to correctly handle most situations. However, sometimes it may be necessary to disable the time verification process, which you can do using the Preferences screen.