its works via calculation, rev is instant becasue there is a switch in the tranny for the reverse lights.
you can prove this by going 40 mph and have the car in neutral and ever so slowly hold the rpms at some point, as the car slows down the display will show each gear even if your in neutral. i have played with many rental cars with this mostly audi a3 6 mt.
Now that's thinking out of the boxer
fyi all 05 + legacy's have built in code reader