MG1 can provide some resistance against the ICE's motion, causing part of the ICE's power to drive the ring gear instead. So in some cases, you have MG1 acting as generator (thus resisting the ICE) and driving MG2 electrically, AND you have mechanical contribution by the ICE as well.

There's a detailed explanation of all the various modes the gears interact in here: http://prius.ecrostech.com/original/Understanding/WhatsGoing...