To answer my own question, for those who come across this in the archives:
I recieved an answer from Meteonorm that said:
It's based on monthly values which is calculated to hourly values by means of stochastic generation (see
http://www.meteonorm.com/media/pdf/mn6_theory.pdf)
For TMY2 output the time step is hourly (perhaps TRNSYS reforms that to 10 minute data). Meteonorm could also generate 1 minute time steps.
From the link above, I found this, which explains it in a bit more detail (and there is much more detail if you explore that link):
To meet present day needs, monthly average data is no longer sufficient, and many design codes call for hourly data. However, since the interpolation of hourly values at arbitrary locations is extremely time consuming (only feasible using satellite data), and necessitates extensive storage capacity, only interpolated monthly values at nodal points are stored.
In order to generate hourly values at any desired location, stochastic models are used. The stochastic models generate intermediate data having the same statistical properties as the measured data, i.e. average value, variance, and characteristic sequence (autocorrelation). The generated data approximates the natural characteristics as far as possible. Recent research shows that data generated in this way can be used satisfactorily in place of long-term measured data (Gansler et al., 1994).
The following generation procedure is adopted. Starting with the monthly global radiation values, first the daily values, then the hourly values are generated stochastically. Further characteristic values, e.g. temperature, humidity, wind, longwave radiation, are derived from these as required.
Most feel that it takes large groups to spur change, but there has never existed a group that was not made entirely of individuals.
We can each make a difference.
Mitchell Leckner