The keyword on specifies that the port advertises to its link partner that it is EEE capable at certain speeds. If both sides, during auto-negotiation, determine that they both have EEE on and are compatible speed wise, they will determine other parameters (how long it takes to come out of sleep time, how long it takes to wake up) and the link comes up. During periods of non-activity, the link will shut down parts of the port to save energy. This is called LPI for low power idle. When one side sees it must send something, it wakes up the remote and then transmits.