A variational search, two sites at a time
Any normalized trial state has an energy at or above the ground-state energy. DMRG searches among matrix product states of a given bond dimension for the one with the lowest energy. Optimizing all tensors at once is a hard non-linear problem, so DMRG improves a pair of neighbouring tensors with the rest held fixed.
With the other tensors fixed and kept orthonormal, the energy of the pair is a quadratic form in its entries. The best pair is the lowest eigenvector of a small effective Hamiltonian, which a few Lanczos steps find. A truncated singular value decomposition splits the pair back into two tensors and keeps at most the allowed number of Schmidt terms. Then the window moves one site. Schollwöck describes this iterative search in Section 6.3 of his review.
Three diagnostics, and what each one misses
The energy is the first diagnostic. On the critical Ising chain of 32 spins with at most sixteen states per link, the error against the exact free-fermion energy falls from 0.035 after the first sweep to 0.0012, to seven millionths, to eight billionths, and settles at about two ten-billionths from the fifth sweep on. A settled energy tells you the search has stopped, not that it found the ground state.
The energy variance is the second. An exact eigenstate has zero variance, and a small variance guarantees an eigenvalue close to the measured energy. Schollwöck recommends it in Section 6.4 as a check that does not depend on the two-site setup. The third is the discarded weight of each truncation. Both shrink as the bond dimension grows. With only four states per link the same chain keeps an energy error of one thousandth and a variance of 0.0038.
Worked example
Check the Heisenberg chain against the Bethe ansatz
Karbach, Hu and Müller give, as their Eq. 13, Hulthén's ground-state energy of the infinite Heisenberg antiferromagnet: a quarter minus the natural logarithm of two per bond, about minus 0.443147 in units of the coupling. An open chain cannot be compared with this number directly. Its two ends cost extra energy, so the energy per bond of a 32-spin chain is minus 0.4515.
Take differences instead. Adding sixteen spins adds sixteen bulk bonds but leaves the two ends the same, so the end energy cancels. Run DMRG for 16, 32, 48 and 64 spins, with the energy variance at most about one millionth in each run. The energy per added bond comes out as minus 0.442849, then minus 0.443040, then minus 0.443092. The gap to the Bethe value falls from 0.00030 to 0.00011 to 0.00006 as the chains grow. The same DMRG code also matches exact diagonalization of the sixteen-spin chain to two billionths.
A tiny variance that hides the wrong state
Lower the field to 0.7, into the ordered phase. Two states now lie extremely close in energy: an even and an odd combination of the two ordered patterns. The exact ground state of the finite chain is one of them and has a definite value of the spin-flip parity. DMRG at bond dimension sixteen returns a state with variance below two billionths, yet its energy is 5.6 millionths too high and its parity is 0.002 instead of a definite value.
The variance did its job: it guaranteed an eigenvalue nearby. It cannot tell you which one, and with two nearly degenerate states, a mixture of both also has a small variance. The symmetry-broken state is also cheaper to store: as the cat state of chapter two showed, the even or odd combination carries an extra logarithm of two across every cut. Only the symmetry check gives it away. On the critical chain the same check reads a parity of 1.000.
Read the entanglement it found
After the last sweep, the Schmidt weights at every cut are available for free. On the critical Ising chain the entanglement profile follows the Calabrese–Cardy form for an open chain. A fit of the central charge to the DMRG profile of 32 spins gives 0.523992, which differs from the fit to the exact free-fermion profile by less than a ten-millionth. The value sits above one half because 32 spins is a short chain; chapter two shows the exact fit approaching one half as the chain grows.