It’s reusing the air already in the car. This helps it cool down as others have said since the air the A/C is cooling is already cooler than the air outside the car.
This won’t cause you to get CO2 poisoning because fresh air is still getting into the car through other gaps and openings to the outside. It’s not an airtight environment. There probably isn’t much difference between the amount of Co2 you’re breathing from using outside air or recirculated air. In cartain situations, I might argue you would be better off brrathing the recirculated air. If you’re stuck in heavy traffic then you may be breathing in some of the exhaust and fumes coming off the other cars. If you use recirculated air the A/C can help filter some of that out.
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