Oil in BMWs is such a difficult thing! You'd think that somehow the rules of chemistry and the laws of physics don't apply to BMWs like the rest of the cars in world.
So this is how the oil level system in an E90 works. There is an oil monitor sensor build into the oil pan. It works electronically via a set of capacitors to measure the level of oil in the engine and the quality of the oil in the engine. There is also an algorithm in the ECU that uses several data points to determine when the oil requires changing. The datum are things such as time, mileage, cold engine start, warm-up time, engine speed, etc.
The system is designed to maintain a proper level and quality of oil in the engine to keep it lubricated and operate the VANOS system. The oil level system is more sophisticated than just what a mechanical dipstick can provide, so the dipstick is not necessary to keep track of level the oil, that's why BMW does not include it.
The oil level in any engine should be measured when the engine is at operating temperature. The BMW E-dipstick provides the measure of oil for the last (or top) quart of oil (i.e. the 7th quart of oil). The oil change procedure is very simple, drain the old oil, and add 7 quarts of new oil. The e-dipstick takes many level measurements over time and eventually reports on the level once all the parameters it needs to determine the oil level in the engine (temperature, RPM, pressure, etc,).
Most people don’t understand the system and expect it to function like a direct-read mechanical dipstick, but it doesn’t work that way and it is why people have difficulty with it. Changing the oil and only adding in 6.5 quarts and expecting the system to read low is not using the system the way it was intended to operate. The system is intended to be drained and refilled with 7 quarts of oil, not adding 6.5 quarts and “topping” off the level by using the (mechanical) dipstick, like some cars fill procedures with mechanical dipsticks suggest.
The level of engine oil is not as critical as many people think. Engine oil needs to be in a “range” of quantity, not an “exact” level of quantity. All engines have a built-in reserve of oil quantity to keep the engine properly lubricated under varying conditions. If you read car owner manuals for mechanical dipsticks, they explain the oil level should be in the range of the hatchmarks (or lines) on the dipstick, not that the oil has to be at the exact top line on the dipstick. The readout of the BMW e-dipstick is analogous to the hacthmarks on a mechanical dipstick.