It sounds like you might have your temperature probe too close to the element, which is why you are noticing temperature swings.
When in manual mode, the PID functions as a PWM (Pulsed Width Modulation) controller. This means it will turn the element on and off to achieve a power output of your choosing. When you select 50% this means that the element will be on half the time and off half the time. In the case of T=4, the element will turn on for two seconds and then off for another two seconds.
This is the most efficient ways to control power output.