I had to go to work at 2 AM today and noticed some de-icer had been applied to the road and there was a bit of icy sheen. I looked at my mirror display to check the temp and saw it was 35 degrees, but then it said "Ice" and went back to temp. It did this a few times then stopped and just displayed temp and there was no more ice on the road. I had no idea my Denali had this feature! I assume it used a combo of temp and traction control to diagnose the condition.
Afaik it's just a temp thing. Mine will do it when I fire it up and it's sitting in the driveway. Close to 32 there could possibly still be ice, so it flashes the warning.