Not 100% sure but I think it relates to the number of pulses (revolutions of the wheel). The standard setting is 3795 that relates to a very big diameter tyre that doesn't exist in M3W terms, hence the error. The new Blockleys are a little larger in diameter than the used Avons, so a smaller number. New Michelin Commander II are smaller diameter and they must rotate more times over the calibration distance, so a bigger number (not smaller as you say). There is also a calibration feature that you can use over a known distance of a mile (or maybe a km?). I have not done a metric speedo but I assume the same system applies.
