Yes, you're correct. As the input voltage increases the on resistance of FET increases, which requires the gate voltage to decrease.
If the input voltage increases, the PMON sink current increases to >200uA (the LM334 is still always outputting 200uA); e.g. let's say PMON sinks 220uA. There is therefore 20uA which comes from the 100N capacitor on the FET gate, decreasing its voltage. This in turn increases the FET resistance which will decrease the FET current and also decrease the PMON sink current. The current from the capacitor will decrease to 0 (PMON sink current == LM334 current), and this means the measured power is again 8W.
If the input voltage decreases, the PMON sink current decreases to e.g. 190uA which means that the 10uA difference flows into the cap which will increase its voltage. This will reduce the FET resistance and increase the power, which will increase PMON back up towards 200uA - when it reaches 200uA the currents are again equal and the FET gate votlage remains constant (as does the output power).