http://www.nhtsa.gov/cars/rules/rulings/lsv/lsv.html
Vehicles under 3000lbs and with a max speed of 20-25mph (like golf carts) do not have to meet the safety requirements of passenger vehicles.
This wikipedia page sums up the situation pretty well:
There are similar laws preventing mopeds and other motor-driven bicycles from entering highways; the laws prevent the vehicle from maintaining highway speeds and therefore they are forbidden from entering the highway.
A highway, as defined in the CVC, is the generic term for any public road on which the Vehicle Code applies, even if it's one lane each way: '360. “Highway” is a way or place of whatever nature, publicly maintained and open to the use of the public for purposes of vehicular travel. Highway includes street.'
As for the speed limiter, a 25 MPH hard limit is ridiculous unless they were limiting usage to streets with a 25MPH limit.
(IANAL) "Highway" means road or street[1]:
> 360. "Highway" is a way or place of whatever nature, publicly maintained and open to the use of the public for purposes of vehicular travel. Highway includes street.
(I've never actually heard highway used in common speech that way; only in the vehicle code, but that I think is what would count here.) The article also seems to indicate this was El Camino Real, which is also CA State Route 82.
[1]: https://www.dmv.ca.gov/portal/dmv/detail/pubs/vctop/vc/d1/36...
It should also be here[2], but that page is blank for some odd reason.
[2]: https://leginfo.legislature.ca.gov/faces/codes_displayexpand...
Sounds like Google's decision to me. Either way, it's not a highway, so that section seems irrelevant. And "in compliance with the law" is quite a broad redirect.