This is determined by taking a pre-boil gravity reading. I pull some wort out of the kettle, cool it a little bit, measure the gravity, then return it the boil. Brewing software does the math for you, but here's an example, sorry there's math involved:
Let's say you boil-off 1 gallon per hour and you're doing a 60 minute boil. Your recipe is for a 5 gallon 1.050 beer. 1.050 = 50 gravity point per gallons, and if you're batch size is 5 gallons, that's 250 total gravity points (50 X 5).
Pre-boil, you have 6 gallons of wort, the wort should be at about 1.042 pre-boil (250 total gravity points / pre-boil volume, then adjusted to the 1.xxx format). The dissolved sugars remain during the boil, but the volume of liquid decreases. If your pre-boil volume is lower, say 1.032, that's 32 x 6 gallons = 192 total gravity points, but you needed 250, so you add some DME.
DME has about 43 gravity point per pound (the manufacturer will list this number). To solve for the amount of DME needed: (250-192) / 43 = about 1.3 pounds of DME.
I hope this makes sense. I would highly recommend the book Designing Great Beers by Ray Daniels. The books discusses many topics like this, as well as advice for specific recipe styles. It's a great brewing resource.