Hi Chris, here's how it's been explained to me in the past and Nutz is right, it can usually be attributed to sluggish or a stuck open auxillary air valve - (AAV) I've labelled Nutz's pic to assist.
When your throttle butterfly's closed, your engine is fed air via the Idle Air Bypass Circuit. The "Y" shaped hose with labels "1" and "2" takes air from above your throttle butterfly then is split into two whereby some goes via the Hot Idle Screw via "2" and the AAV via "1". Your AAV controls supplementary airflow to the idle air bypass circuit so that when your engine is cold, your AAV will be wide open and supplying the max amount of supplementary air above and beyond the amount the hot idle screw can. As the engine warms up the AAV should begin to close as the coolant warms up. I can't remember exactly now what temp the AAV should close completely but I think it's around 70+degC. At that point the idle air bypass circuit should only be fed air via the hot idle air screw.
You start the car when the engine's cold and find it goes into this cyclic up and down idling. The engine's getting too much air. The ECU takes inputs from other d-jet components like TPS (throttle postion sensor), air and coolant temp sensors etc, and pulses the injectors towards max enrichment. The ECU has an idle rev limit in mind according to what state the engine is in. ie cold, warm, hot or anywhere in between. It's not a defined number as such that's been punched into the ECU but more of an act of 70s electronic wizardry that sets the rev limit. Once the revs hit that limit the ECU cuts off the fuel by stopping pulses to the injectors until the revs drop below a lower limit that I've no idea what it is. But once that lower limit is surpassed, the ECU recommences pulses to the injectors and so continues the cycle. As the engine warms, the fuel enrichment dwindles and you may find there's less of a tendency for the upper rev limit to be reached at idle.
Even when the engine's warm you may still notice the cyclic idle during an overrun. Eg, you're coasting around town coming up to traffic lights and take your foot off the accelerator and notice this cyclic surge and dropping off of power. Depends if there's still too much air going through the idle air bypass circuit.
The cause of this excessive air can be caused by a poorly performing AAV by itself but also in conjunction with vacuum leaks of the intake. Various seals or vacuum hose circuitry may be letting extra air in as well and contributing to the problem.
Fixes would include eliminating all vacuum leaks plus replacing or trying to service the AAV, usually by removing it and soaking in it a penetrant oil or carb cleaner then putting it's heat element through a number of heating and cooling cycles to help free up its innards. Alternatively you can place a restriction in the "Y" hose, in the part labelled "1", with a small piece of fuel hose or other cylindrical shape that will reduce the inner diameter of that hose to your AAV.
Whatever you change, you must reset the idle screw afterwards by warming up the engine fully then adjust the idle screw until revs drop to specified rpms.
