Very good question B-rad, and Ironman too. I wondered the same thing because although the rest of the body works from stored glycogen. Every muscle cell stores it, the liver cells store it, but the brain... nope, not one bit of
glycogen storage there. That's why when our blood glucose gets too low we get dizzy, confused, sometimes completely stupid...watch someone in the middle part of a diabetic emergency sometime and you'll know exactly what I'm talking about.
This is where the reported "brain fog" that comes from diets like atkins, DiPisquale's "anabolic" diet, protein power... and the like originates from. For some of us...it's a myth and never happens. For others, it's a fact that makes the first two to thee weeks difficult to live with. Our own endocrine system determines how well we respond early in the diet.
Now to answer the question as best I can in the short time I have this morning before I leave for the gym.
Ketone bodies are the byproduct of burning fat for fuel. Once the body shifts into ketosis, lypolosys, or whatever other term we choose to use for fat burning they are produced. The brain can use these ketone bodies for fuel just like it uses glucose. The body is very adaptable and will find a way to fuel its self. That's why it catabolizes muscle on the "standard" way of burning fat with lots of carbs and protein but still in a
caloric deficit...it's finding a way to make carbohydrate for energy.
By the same token, this "muscle sparing" diet leaves the body looking for alternative sources of energy and the only source available is fat...so you burn body fat. The brain is taken care of too by making ketones. Ketones are used to keep the brain happy.
Granted, for some people the first 2 to 3 weeks are absolute hell and you feel horrible while the body shifts from a sugar burning metabolism to a fat burning one. But to me...it's worth it for the overall benefit of burning fat, saving muscle, improving the lipid profile (lowering the LDL and raising the HDL).
Re: sneaking in carbs through the day. Probably not the best idea. Some say to keep them at 20g. Some will say 30g. Myself, I say to test your urine for ketones and stay right on the edge of ketosis be that 20 or 50 (barely in ketosis for cutting, just out of it for bulking). The first two weeks really has to be strict though with 20-30g/day. Carbs aren't bad, but they do have to be controlled. That means keeping them pretty low most of the time when you want to burn fat easily without losing muscle.
I cycle mine. Sometimes just to maintain while making very slow muscle gains...I will do something like the anabolic diet. Sometimes I do a pure hardcore true low carb 8-12 weeks to burn fat and get really lean. Other times when I want to gain muscle I do timed carbs (high carb/low fat before and after workouts) and high fat/low carb on off days and later in the day when I'm out of my 4 hour post workout window.
Oh yeah, and about "my" high fat diet. It's not really mine. Just like my workouts, I've learned and borrowed (sometimes outright stole) ideas from those who have gone before me and did the hard work first. Then I experimented on my own body to learn how to apply it and what worked best for me. Then I shared with a few people that I work with and learned how to apply things to others.... So, not really mine, I'm just sharing what I've learned.
And of course, like anything else...it isn't for everyone.