Bang on the money. It is indeed an energy recovery system. Some bright spark (electrical engineer pun there - sorry) remembered his basic generator theory and all his Flemings laws, and realised that by varying the regulator output on the alternator and controlling it from the ECU you could turn off the alternator when it's not actually doing anything.
The system works like this. When you're decelerating and engine braking, the fuel supply is turned OFF and the Alternator turned up to eleven, thus getting some "free" electricity into the battery to use later. You will use this electricity later whilst cruising, so the ECU can turn down the alternator, and thus reduce fuel burn. It can periodically turn it up a bit if it senses the battery needs a bit of a top up, but as you've seen, traffic and general driving means this happens a lot anyway. When you give it the full beans, it will also turn off the alternator to direct more energy into the drivetrain.
Everyone is doing this now, but people like BMW reckon they can squeeze "up-to" 4% extra fuel efficiency with this one bit of tech alone.