I know this one!
It’s called a “low pass filter”.
There is an electronic filter that filters out high frequency signals. The more the fuel sloshes, the higher the frequency of high and low.
The goal of the low pass filter is to not allow the gauge to see the higher frequency high and low but only allow the low frequency high and low.
There is a more complex explanation however, that was the easiest that I could make it.
Fun fact, DSL filters on your home phone line work the same way.
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