I’m in the Beta, so I don’t know if my observations apply to AP-only and EAP/FSD without the Beta. I’m also in a 2022 M3LR with MCU2 if that matters. Here’s what I’ve seen:
There seems to be three modes regarding speed limit signs, and they seem to be set per road segment. It almost seems like a sort of confidence level for how good the car’s map data is for a road.
In the first mode, speed limit signs are completely ignored. I’ve seen several roads act like this where it won’t see the speed limit sign at all. I suspect the people who believe their Tesla doesn’t read speed limit signs experience a lot of this mode where they normally drive.
In the second mode, it’ll read the speed limit signs but won’t react to them. The interstate highway in my town has a few miles where the speed limit is reduced from 70 to 60 mph temporarily for construction. It displays the new 60 mph speed limit and renders the sign on the screen, but it won’t reduce my speed like it usually does. The temporary speed change is definitely not going to be on any map data, and the car’s probably really confident about its data. I’ve also driven on the toll road here with a 85 mph speed limit. At least as of a few months ago, it was incapable of understanding the 85 and instead always read it as 65 mph instead. Luckily it didn’t limit my speed to 70 mph here (this was right before I got in the Beta). So again, it was very confident of the 85 mph limit, still read the sign, and ignored the sign.
The third mode is where it’ll read the speed limit sign and will reduce/limit my speed to them. This is most noticeable when it picks up a speed limit sign not intended for the road I’m on. There’s a new interstate highway I’ve driven through a few times this year that isn’t on Tesla’s maps at all, so it has zero confidence of its map data here. I’ve seen it pick up a speed limit sign for the access road, display it as if it’s my own, and limit my speed by it (eg my speed limit is 70, access road is 55, it picks up the 55 and applies it to me, limiting my speed to 60).
I also think there’s some default speed limit based on what the road looks like at the given time. I’ve noticed there’s a Minor Collector road near me that shows up with a 30 mph speed limit during the day and often times with a 25 mph speed limit at night.