"Once you are over 10 knots 0.1 knots represents a less than 1% change in speed."
Factual enough statement. That said, trimming to achieve the difference between say, 10.2 kts and 10.8 kts can be quite significant as it is a 6% change in boatspeed.
I do agree that readability is a VERY desirable option.
Consider this suggestion... instead of displaying the 10's digit, always display the last two. (1's and tenths). You could put a '+' symbol, LED (etc) to show over 10 kts boatspead... or (++) for 20's.
It is also very likely the crew will know when they are in the teens... and will instantly interpert a simple '2.1' as '12.1' At that point the logic tells us that always displaying the knots and tents might make the best sense.
Heck, maybe that's the way you do it now, although your answer indicates otherwise... ???
Our first product, the S3, had a precision select feature where you could choose between displaying "12" and "2.1" for 12.1 knots. The feedback from the test team was that they never used it in high precision mode so we dropped the feature to simplify the user interface. We've done a fair bit of testing and listened to feedback from our customers. I have not heard a single complaint about precision from anyone who has actually sailed with an S3, S5 or S10.
I think part of the issue here is the high update rate of the S3/5/10. With a new reading delivered every second, the device is responding instantly to changes in pressure, trim, crew position, etc... This gives you instant feedback on the big stuff which is great. On the other hand, watching tenths of a knot fly all over the place while sailing through chop doesn't tell you much.
If the update rate was slower and we averaged over 10 seconds or more, looking at the tenths would be useful for fine tuning, but we would compromise the device's main benefit which is instant feedback.
Our Speedcompass, which is a bulkier device aimed at bigger boats has three digits and an adjustable damping knob that lets you decide for yourself how you want to tradeoff between precision and response time. Nonetheless, for high performance dinghies, cats and sportboats our testing shows that a quick response is king.