It will only ever be as accurate as the data coming from the GPS receiver.
The better the GPS signal then the better the accuracy will be. The higher the sensor refresh rate the lower the lag will be (both the free and Pro versions have been tested and work perfectly with external high refresh rate GPS receivers).
When near buildings, under foliage or with an obscured view of the sky the accuracy will be reduced. Inside tunnels and buildings it’s very unlikely to get any usable signal at all. If you’re sat indoors don’t expect to see accurate data, the signal will be so weak the location will probably be jumping all around your location giving a false speed reading.
With a clear view of the sky and a high accuracy reading the app has been found to show within +/-1MPH of UK roadside Police speed signs on a Samsung Galaxy S3 in a windscreen holder.
Don’t think that because the speed doesn’t match the speed shown by your vehicles speedometer that the app is inaccurate; vehicle manufacturers usually design the speedometer to read high (to account for tyre wear and other environmental variables) so that if you’re travelling at the speed limit your actual speed is several percent slower.
Having said that, don’t rely on it for your speed if it’s accuracy is unknown (read this post).
A small snippet from The Car Expert about car speedometer accuracy (UK specific):
The UK law is based on the EU standard, with some minor changes. A speedo must never show less than the actual speed, and must never show more than 110% of actual speed + 6.25mph. So if your true speed is 40mph, your speedo could legally be reading up to 50.25mph but never less than 40mph. Or to put it another way, if your speedo is reading 50mph, you won’t be doing more than 50mph but it’s possible you might actually only be travelling at 40mph.
To ensure that they comply with the law and make sure that their speedometers are never showing less than true speed under any foreseeable circumstances, car manufacturers will normally deliberately calibrate their speedos to read ‘high’ by a certain amount. As your satnav is not the designated device by which a car’s speed is measured, it does not need to incorporate any fudge factoring.
If you’d rather show the speed matching your vehicle’s speed the Pro version allows a percentage offset to be applied to the speed.