Re: What is being modulated & demodulated, exactly?
Though I always think of FDM as an analogue voice multiplexing technique, xDSL does genuinely use FDM. The available bandwidth of the copper pair is divided up into channels by frequency and data is modulated to occupy as many of these channels as can reliably exist on a given pair.
The higher frequency channels have the highest attenuation and as line distance increases more and more channels become unusable. The 'upto' figure beloved of ISPs refers to a situation where line length is short enough that all the channels available in a given channel plan are available.
So, er, yes. There really is modulation and demodulation going on and that process is to move data in and out of FDM channels. I doubt though that measuring the level of a sine wave at 84.08khz will be much helping in troubleshooting your home Internet connection.