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1. GPS / Satnav location.
2. Camera on the front reads road signs.

So if you are on a motorway it will set it self as 70mph. Then if you hit road works with the temp signs up at 50mph the camera see's this and adjusts to 50mph.

Two problems have been found so far. National Speed Limit is set to 40mph not 60mph (although it's technically 30 or 60mph depending on street lights or not).

The other problem some people are finding is that a sign on a slip road etc.. might be getting picked up by the camera. So again using the motorway example if a slip road is reduced to 40mph it might pick this up and think you are on that road.

The first will definitely at some point get fixed with OTA update ... the 2nd should too ... but can't be 100% sure.
 
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