That's interesting to hear! I figured the larger the memory the more could store. Does it not work as a dashcam in that respect, or just records 10 minutes when you hit the horn? etc
Its a Tesla attempt at rushing out a dashcam, so, like many other Tesla attempts at something you are already familiar with, it doesn't work like you expect.
Yes, only saves drive footage when you tell it to save, ie press the save button in dashcam icon, or honk the horn if you enabled that feature - even the latter is a recent feature. Otherwise it only holds a buffer of last 60 minutes drive, and that gets constantly 'overwritten'.
Sentry is slightly different. It automatically saves the 10 minutes up to and around the sentry event, so normally 10 minutes of nothing useful.
As media drive becomes full, stale saved clips are automatically deleted.
So the only advantage a larger drive brings is that you reduce overwrite wear rate (only an issue on poor quality media) by reducing how often it overwrites. The disadvantage of a large media drive is that it can hold more useless clips and requires more housekeeping if you want to keep it free of stale footage.