CPS = COMMANDS/SEC

or

CPS = Ascii CHARACTERS/SEC

Depends on what you mean.

CPS is characters per second, but that's only from the TW node screen.

If you're talking about CPC, the game setting, then it's commands per cycle.

Linky:
http://i54.tinypic.com/2uqcayg.png

That's from the t-edit screen where you set the CPC (option S).

the One from the * screen that the sysop sets.

There is no CPS in the * screen.

What I suspect you mean is the "max commands" setting, right?

Ie:
Max Commands=20

That sorta thing?

That's the CPC, or commands per cycle. That is changed here:
http://i54.tinypic.com/2uqcayg.png

It's option S. That's where the sysop sets it. As you can see,
it's neither "commands per second" nor "characters per second"
but rather "max commands per cycle."

If you look at the same image, the cycle is defined in option 1.
This is, by default, 1 second. But it can be changed. So in that
sense, it usually means "max commands per second" but that
is by no means a given.

So of the two options you gave, neither is correct. However,
"commands per second" is the closer of the two.

So if it is "commands" to the game then spaces and carriage returns/line feeds don't count as a command?

I don't think spaces count, but you'd have to research it to be sure.