The PSU regulates its output based on the measured output current. In your case, it will increase the output voltage if the current is <700mA and increase the output voltage if the current is >700mA (the output voltage will remain constant when it has 700mA flowing through the output).
That said, it is the LEDs on the output that set the voltage; if one LED is connected and its forward voltage drop is 3.4V at 700mA, then the output voltage will be 3.4V (until the LED heats up and the voltage changes for the same current). If you put a 10 ohm resistor on the output, then the output voltage will be 700mA*10 = 7V
The PWM signal sets the output current; if you feed 100% D PWM in, the output current should be 100% of 700mA = 700mA. If you feed in 50% D PWM, then the output current will be regulated to 350mA (and the output voltage will decrease accordingly).