I posted this explanation several days ago but in the wrong place. Here it is the reply again.
In internal combustion engines there are three main curves: power, torque and...............something called Brake Specific Fuel Consumption (BSFC). This last curve is the one that you are referring to. The position of the "peak point" of this curve varies for each design and it has to do with the design of the engine, the design of the cams that open the valves, the overlap of the cams when both stay open, diameter of the piston in relation to the displacement, crankshaft dimension, RPM's, masses and inertia of the engine components, etc, etc, etc. This curve reflects the efficiency of the engine, not how efficient the engine is but where the maximum efficiency is located on the curve in relation to the RPM's. In other words, it shows how capable the engine is in generating HP @ a certain RPM with the best fuel consumption. Said it in a different way......the least fuel burned per HP produced or the best bang for you buck if you like. That is the reason why up to a certain RPM you will get the best results but crossing that point the engine will still deliver more HP (almost all the way up to the maximum RPM, but not at the maximum RPM) but the fuel economy drops. The internal combustion engine does not deliver the highest power at the maximum RPM, that happens before the engine reaches that point.
Ideally you would want that curve to be as flat as possible for the widest possible RPM range but Otto didn't make it that efficient. In fact the internal combustion engine is an extremely poor performer in terms of efficiency. You give it 100% of power (fuel) and it gives you back (at the flywheel) around 25% for gasoline engines. The rest is wasted in heat and friction. The Diesel engine is a little more efficient but not by much (around 35%).
I hope this explanation makes sense.