Newell Gurus

I'm trying to understand how the light dimmers work in my Newell. They have what appears to be a potentiometer/switch but those 3 wires terminate at a finned aluminum "box" . The actual wires to the lights are routed through the "box". It looks to me like the system loses a LOT of power to heat when the lights are dimmed. Is that correct. Is there a better more efficient way to dim the lights? Is this system obsolete? I hate to remove it because it works really well. I plan to eventually convert totally to LED's