Determining if a game is CPU- or GPU-limited
Two rules of thumb I used to use:
If increasing the resolution brought about a large drop in the frame rate, it could indicate that the game was GPU-bound, as the increased resolution makes the video card work much harder and, as a result, takes longer to get each frame out the door.
On the other hand, if increasing the resolution brought about only a negligible decrease in frame rate (or no decrease at all), then it was an indicator that the game was CPU-bound, as the additional video complexity was easily handled by spare video card processing capacity whereas the main game processing logic already pegged the CPU. In this situation, the game engine is too busy to be able give the video subsystem enough work.
However, I don't think games nowadays are so simple that the performance is easily limited like that. For many years now, GPUs have gotten more complex and developers are finding ways to offload more work to them, so there's a lot of work that could be done on either side... this is why I don't use these rules of thumb very much anymore - they just don't really apply. The assumption was that raising the resolution did not cause additional work on the CPU.
If you followed those video card benchmarks from Tom's Hardware Guide religiously in those early 2000's years, you could see this sometimes - running e.g. Quake 3 using a "modern" video card and you'd get so many bar charts that just flatlined.
If you can measure the frame rate of your game, give this a try and see what happens.
As reducing the screen resolution and/or texture details options is pretty much guaranteed to improve the performance of any game, this can't be used to determine whether it's GPU bound or not. You could look to see what the highest resolution/texture detail level is available for your system.
If you could reduce the performance of your CPU (underclocking?) then this might give you some indication of whether the game was CPU bound - but again I don't think it can be 100% reliable.
There's also a blurring of what's done by the game engine (CPU) and what's done by the rendering engine (GPU). In the late 1990s/early 200s game physics used to be done by the CPU, but then graphics cards started being capable of performing these calculations on dedicated hardware thus speeding them up and improving performance. This means that seeing how many objects are moving on the screen (for example) can't be used as a guide to how powerful a CPU you have as a lot of the motion might be being controlled by the GPU based physics engine.
One thing to bear in mind is that due to the wide range of hardware that PC games have to run on game developers will be on the look out for any tricks that can improve performance and also the game will (hopefully) degrade gracefully so that it's playable on the lower end machines. This means that if you have the hardware available it will get used, if not to the utmost, then pretty close.
from a purely observational perspective (not checking other applications etc) I believe that if you are CPU bound you'll find the that there is a lot more frame stutter as the GPU waits on the CPU, where as if you are GPU bound there will be a more consistent experience, albeit slow and laggy.
this could all be hooey though.