Hello. I also have one of these machines. The two speed will shift gears when the gears are turning at a certain speed. It works similar to a centrifugal clutch. There is a clutch inside the gear mechanism. If you look at the manual which came with the car, it shows how the gear assembly is put together. The way it is built makes it clearer to understand.
There is a small hex screw you can adjust which determines at what speed the gears will change so you can adjust it if the car is not changing quick enough. Only make small changes at a time but (like 1/8 1/4 turns at a time).

Hope this helps.