The format is indeed days:hours:minutes:seconds. It counts from the last moment you restarted your pc. Not to be confused with turn off and on, given that you close all applications and put the pc into hiberation if fast boot is turned on.
For example, I rebooted my pc 2 days ago, but shutdown and started twice after. The timer on my task manager still says 2 days ago, even though the pc was turned off last night.
Seeing the comments, lets address a bit more why a shutdown is not seen as system uptime reset, where a reboot is.
If you work on your computer, and you put the pc into sleep/standby, and you press a key to wake it up, you are still using the computer, and windows does not consider that a moment to say: uptime has to be reset. This is obvious. You are still working on the computer. When you go one step further, hibernation, You still keep all programs running, the sleep state is just deeper. The system is totally powered off, and depending on how hibernation is setup in your system, either the entire content of memory is sed to disk and a total shutdown takes place, or the system is placed in a very low powerstate where the memory keeps being supplied by memory, but the system otherwise is turned off.
To windows both are technically the same, and the result for both is, when you start up the computer, windows resumes from hibernation and after a bit of waiting your programs are ready for you again. Same as the sleep state really, but does not use as much power.
When it comes to laptops, that he a built-in battery, when power runs out, and the laptop is not connected to an AC walloutlet, the laptop will be put into standby first, but when power runs too low, is switched to hibernation. The result is essentially the same, after you plug it back into power and start the laptop, you can resume where you left off without losing data.
The above mechanic exists in windows for a really long time. Not sure about Windows 3.11 family, but definitely was present in Windows 95 and up. Okay, the hibernation part has changed slightly over the years as motherboards started to allow different states, but the point I'm trying to make is the same.
In hibernation mode, when coming out of it, windows does not consider it a reason to reset the up-time state because your programs are still running, and the only reason why the up-time counter is actually important, is to figure out how freshly booted the system is.
When a system is running for a while, it can become unstable. By checking the up-time, you can quickly see if instability could be due to a system being on for a long time, or that there's another problem. If this timer were reset by going into sleep/hibernation, its purpose would be gone.
Now, in Windows 8 and up, we he a new feature called Hybrid Shutdown, or Fast Boot.
What this does is close all programs, then put the system into a hibernation state. Keep in mind, that at this point, not everything is closed. Its not a true shutdown. The difference? Drivers and part of the Windows Core are not shutdown but remain active. Since it is mostly drivers that are loaded during startup, the startup routine is severely shortened and fast boot can be really fast.
Now, the thing is, when a system becomes unstable due to not being powered down for a while, it is often the drivers that crashing the system. So you see, the up-time counter is for measuring how long the drivers are up-and-running, and for that reason, only a restart or hard shutdown will also reset this timer.
That said, you would expect that it has a timer running all the time to measure how long the system is running, but this is not the case. It just queries the eventlog for a specific event ID that is fired when a system comes online after a reboot or hard shutdown. This is also why the counter seems to be running even if the system is in hibernation.