Haha, I knew this one was coming as I typed "city streets".
You're right, it is not intended to be used in city streets, but I don't think the system is limited by design, it's limited by the technology.
It's limited by both.
The computer can't handle 8 cameras at full frame rate, and none of the programming is meant to work on city streets either.
For example, I don't think the system sucks at dealing with left turn lanes because the developers thought they didn't have to bother with that scenario, I think it sucks because they could not figure out how to handle the scenario.
It sucks because the fundamental basic assumption of AP right now is:
You are driving on a limited-access divided road, with all traffic going in a single direction, no cross-traffic, and people only entering or exiting via ramps/exits.
City streets violate virtually every element of that assumption.
I strongly disagree here. I don't think FSD will use entirely different HW and SW, but actually a lot of the same HW and SW.
Tesla has been quite clear on this.
FSD (the city streets kind) will require HW3.
It will also require a different branch of software (that won't run on HW2.x, runs much larger neural net code, and currently isn't deployed on any consumer-owned vehicles)