Is it not supposed to deal with the recording space as a circular file? I.e., when it "fills up." isn't it supposed to just start recording over the oldest file in the folder?
It depends on what you mean by "recordings." As per
my earlier reply in this thread, both the dash cam and Sentry Mode record about an hour's worth of video in an ongoing recordings subdirectory. (I don't recall the name of the subdirectory, but it's pretty obvious.) When in Sentry Mode, if an alert or alarm event occurs, the system moves the most recent ten minutes' worth of recordings into its own subdirectory of the saved recordings subdirectory (again, I don't recall the precise directory names), then keeps recording. Much the same thing happens when the dash cam is active, but in this case, it's your pressing the recording icon on the center console screen that causes ten minutes' worth of recordings to be saved. If an hour passes without any alert, alarm, or manual saving of recordings happening, the system should delete the oldest of the ongoing recordings, and keep doing so once a minute, recording one new minute's worth of video. The result is a ~1-hour buffer of recordings that you can review if you pull the drive, plus whatever recordings were saved by you (manually when driving from the dash cam) or by Sentry Mode alert or alarm events. The Tesla will never, AFAIK, delete a saved recording, just items from its ~1-hour recording buffer.
A drive can fill up completely either if it's too small to hold an hour's worth of video or if enough videos are saved manually or by alert/alarm events. If you save recordings manually or use Sentry Mode, chances are even a big device will eventually run out of space if you don't manually clean them out. It's conceivable that a bug could cause ongoing recordings in the ~1-hour buffer to not be deleted and thus fill the drive, but I've not heard of such a bug.
Also, AFAIK there's no way to unmount (aka "safely remove," "eject," or other terms) the drive. The result can be filesystem damage, even if you turn off the dash cam before pulling the drive. I recommend performing a filesystem check on the drive whenever you access it on a computer. This will minimize the risk of it developing filesystem damage. A filesystem check can result in orphaned video data appearing in files in the root directory of the device. In theory these could eventually fill up the disk, although I'd expect this to take a long time on any but a very small device. It's safe to delete these files (although if you're looking for footage of a specific incident and can't find it, checking the recovered files is worthwhile).