I actually had the same thought process, as mine went off a couple of times when I thought I wasn't close to anything. Could't find it in the instructions so rang Skoda assist and they explained what it was.
The system uses radar, so although you might think that you might not necessarily be that close to anything, it will warn you based on your speed and proximity to any object that may be in front of your car - I got a warning as a newspaper blew in front of my car!
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