It doesn’t really know anything about the segment itself… it uses your current MPA & your fitness signature to display the highest average power you could sustain for the target completion time & adjusts on the fly as you go (so if you push well above the suggested power, the power target will drop a bit, and if you ease off a bit, the target power might increase a bit). It’s a pretty simple, but useful tool!
It typically works best for segments that are <20 min or so.