As you observed, lane selection is basically the one thing that FSD is completely incapable of. But other things it does well. It's important to note this is completely incompatible with the narrative spun by Tesla haters, that it all comes down to LiDAR. LiDAR cannot help with lane selection.
Why does Waymo not have a problem with it? It did really well in dense streets with people barely pulling over to stop and run into a storefront or picking people up from a restaurant. It would pause for a second, put on turning signals, and then pull around the stopped car. It did this several times, in fact in spots where I would have waited because its estimation of distance and obstacles in a 360deg around the vehicle is flat out better than me as a human. I was really impressed.
Waymos stop in the middle of the street several times a day, behavior I've never seen or even heard of from FSD. And I'm not sure what it has to do with lane selection.
FSD goes around stopped vehicles without any problem too.
And that means they know what lane they need to be in 100, 200, 500 ft down the road. Tesla has map data but it's so poor that they can't get the lanes right.
I haven't really seen the narrative that it all comes down to lidar. I mean it's one sensor type amongst vision, lidar, gps, ultrasonics, sound and radar. For whatever reason Tesla has chosen to go a bit minimalist there.
TBF the Ford CEO, in an interview, said lidar is the difference. But I can't blame him for going with the sound bite in that context. No doubt he knows there are lots of differences. My favorite underappreciated difference is that Google has crazy amounts of geospatial data.
