We know that some flavors and odors do stimulate appetite, make the mouth water and so on, but I know of no evidence that they increase the body’s need for insulin. There is however, a lot of evidence — both in scientific studies and in the experience of people who closely monitor their blood sugar levels after eating — that less carbohydrate means a lower need for insulin.
Since your friend’s son is meeting all of his insulin needs through injections, it is likely that his parents simply adjust the doses for the actual need. This is based on both the carbohydrate content of the food eaten and the current blood sugar level.
In passing, I’d like to add that it’s not necessary for your friend’s son to strictly avoid sugar because of his diabetes. As long as the carbohydrate value of sweets are accounted for and adequate insulin is supplied (just as the body would do if there were no diabetes), sweets can be a part of an overall healthful diet for youngsters with diabetes, just as they are for other kids. Diet foods can be a tool, if counted correctly when they contain carbohydrates other than sugar, but they are not a necessity.
BB