Thats correct. Their servers monitor the speed of the phone against the posted speed on the road and draw graphics accordingly. Over time they have learned patterns in different areas and various users. When the system was in beta in LA it would often come up and say "we've noticed you have slowed down, is that because of traffic?" , and you answer if you can.
WAZE also responds to voice commands as well, so there is little, if any fiddling with the screen at speed. I worry about people fiddling with email, facebook, and their GPS more than this. You can easily spend more time attempting to dial a phone number than dealing with WAZE