As long as it has detected the other vehicle and you’re using the ACC, the VW brakes and accelerates to maintain the distance – ACC needs to be activated like normal cruise control – it doesn’t come on automatically that I know of – on the Tiguan I always keep the distance to car/lane detection display active so I know that the car in front of me has been detected. There have been several times it hasn’t noticed – seems to happen with dirty black cars (or maybe that was just today and it’s fresh in my head)
As long as the car is included in the graphic it means your vehicle has detected a vehicle in front of it but if there isn’t a car there then it thinks the road is clear. (Might be different to below, I didn’t take this pic, i stole it from another site)

"Man is born in freedom, but he soon becomes a slave, in cages of convention, from the cradle, to the grave."