I've now found out how CTS is computed:
The pseudo-waypoint is at point B, where dist AB=BC. CTS provides the track (or 'course' in Spam-speak) to steer to aim at B. As you fly towards it, point A (the perpendicular erected from present position to desired track) will change, so that the 'mid-point' B will also move, allowing a gradual track intercept.