Speed Limit Display uses a combination of a camera located in the front of the rear-view mirror (which can read road signs, temporary road signs and gantry signs) plus information stored in the navigation system about speed limits.
I'm finding it to be pretty accurate and very quick to respond. A couple of days ago I was driving on a dual carriageway and the Speed Limit Display was showing 70mph. I slowed down to enter a section with road works and there was a 40mph sign propped up either side of the road. As I passed the signs, the display changed to 40mph... neat