One of the FitDay administrators answered this a couple months ago and said that it DOES include sleep.
However, for myself, I have to put sleep in; when I do, it all balances out and translates into 3500 calories burned "on paper" equals one pound loss on the scale. I don't know why this is, but after 3 months, it has been dead on. So I continue to put sleep in, though YMMV.
"If you drop an egg, you don't say, 'Oh, shoot' and drop the other 11, do you?"
-Source unknown, but obviously brilliant
Reached goal 4/16/2010...but kind of afraid to look these days