This is an important step. For the first time there is full self driving where the driver is no longer require to pay attention to what the car is doing. However, this is not a generic solution. This system is limited to a very narrow set of conditions. Specifically, to premapped highways with a divider between directions, no crossings, just on- and off ramps. On top of that, at very low speed, so in normal traffic you unfortunately cannot use it either.

So how does this compare to Teslas FSD (not Autopilot, which really is only an assistant)? The answer is: not much at all. The Mercedes system has limited the conditions to a point, where it basically just has to do collision avoidance with traffic with predictable behavior. It is limited to selected roads. You don't need much "AI" here and for this task, LIDAR excels in the specified weather conditions.

The Tesla FSD system on the other side aims to be a generic driving AI. It has no limitations about on which roads it operates, it uses maps only for navigation to the destination. But the driving operation is done solely by the evaluation of camera footage. Which already works in many more environmental conditions than the Mercedes system.

These systems approach the goal from entirely two directions. The Tesla system aims to be a complete solution, but certainly is not able to do that unobserved in the current state. It is doing reasonably well at that, but the literally billion dollar question is, can it ever get so reliable, that the driver can completely hand over to car ever? On the other side Mercedes has full autonomy, but they achieved that in a very limited and controlled environment - it remains to be seen how much they can extend that.