The way it's generally RP'd is that all mounts are conveniently near by their masters whenever they're needed. Normal steeds are always off munching on grass somewhere near their owners and are summoned by a quick whistle or a special call or whatever the RP'r decides to have it. The undead / felsteel mounts are usually summoned with some sort of spell. I imagine that the Paladin's warhorse would work in a similiar manner. The Paladin and the Horse having a special connection with each other via the light, allowing the Paladin to call the horse forward by invoking some special prayer.
Whether you want it to be an actual spell-like summon or a glorified whistle would be up to the RP'r, I suppose.
I want to see the mangled mess of horse bones desperately burrowing under the ground everywhere their owner goes just so they can burst out every time...
Ahem. Anyhow, I think most of the explanations here work nicely.
"We are here on earth to fart around, and don't let anybody tell you different."
~Kurt Vonnegut
In all actuality I've only had mine do it once, and that was when he was summoned from the grave on purchase. Usually he just stands there like a mindless horse...
Yeah, with Jyoti's dead horse it just wanders around, looking at the grass, not quite remembering why it looks important or lays down in a jumble of bones and rotting cloth. Eggy's (Waldens) Warhorse, I say he summons it much like Krent said. He says a short prayer and the horse materializes next to him then when he dismisses it, it leaves. In game I think a paladin's horse is really a ghost of one. At least according to the Alliance paladins mount quest.