From the photos, there appears to be more than one sensor on the device which may be used to tell which direction the large object is coming from. Unless you were cycling backwards or mounted the device the wrong way around you shouldn't have any stationary cars passing you. Just a guess though.
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So if I’m in a protected bike lane with a row of parked cars to my left wouldn’t it be flagging every parked car as a potential hazard?
Unless there's enough distance to the bike lane every parked car in a row of parked cars is a potential hazard. It's even got it's own name: dooring.
I assumed it could tell whether the car was passing you or vice versa.
From the photos, there appears to be more than one sensor on the device which may be used to tell which direction the large object is coming from. Unless you were cycling backwards or mounted the device the wrong way around you shouldn't have any stationary cars passing you. Just a guess though.