From the article: “If it’s a single-lane residential street and the speed limit is 15 mph, but people are speeding through at 35, they will model the time off that data.”

The article also appears to state that it doesn't model the load dependent throughput-- 'The instant the time penalties work out,” DwarfLord claims, “Waze will just as happily send a thousand Wazers down'. Which isn't surprising, since routing a lot of cars independently is computationally tractable but adding capacities to the problem makes it NP-complete in theory and much harder in practice.