Definition
The amount of power the engine is actually producing at a given moment, set by the pilot through the throttle (and propeller control, if equipped) and indicated by engine instruments such as the manifold pressure gauge, tachometer, or torque gauge. In the control and performance method of attitude instrument flying, power output is one of the two things the pilot directly controls -- the other being aircraft attitude -- and together they produce the desired performance.
Plain English
How much power the engine is making right now, based on where you've set the throttle and what the engine gauges are showing.
Context Anchor
Seen in instrument flying when setting power and checking whether the airplane is giving the expected climb, descent, altitude, or airspeed response.
Derivation
Power comes from a Latin root meaning “to be able.” Output means what is delivered out of something. Together, power output means the useful power the engine is delivering to the airplane, not just where the power control happens to be set.
Why Pilots Care
Correct power output settings are required to maintain stable flight parameters in instrument conditions without constant chasing of airspeed or altitude.
Intuition Check
Do not read power output as electrical power or as the power control position alone. In this context, it means the usable engine power actually being produced and delivered to fly the airplane.
Example Sentence 1
To level off at cruise altitude, the pilot lowered the nose to cruise attitude and reduced power output to the cruise setting.
Example Sentence 2
On final approach the instructor called for reduced power output so the aircraft would descend at the target airspeed without pitching down.