the compressor clutch cuts out solely depending on the thermostat bulb in the evaporator coil, when it senses its about to freeze it will cut it out (just like any other car).
the cabin temperature wheels provide a signal to the heater monovalve to open or close and the air mix is handled in the HVAC box via the series of doors that allow air to move across the heater core and the evaporator.
to make it simple - I will tell you how the US full auto works.
when its blazing hot outside and you start the car with the center pushbutton pressed - the fan amps up speed to max - the fresh air duct closes 90% (HVAC outside temperature sensor is mounted on top of blower box under wiper) and the compressor kicks in after about 5 seconds - it will keep on blowing hard from the face vents till the room temperature starts to stabilize (reference sensor is mounted on the roof of the car) it will gradually control the fan speed and also move about 20% of the air to the defrost vents and then start to regulate the fresh air flap (if hot outside) or heater valve (if cool outside).
You almost forget that you are in an airconditioned car - same with my W210 except that it has a full digital screen - functions the same though. I set mine to 72F and I think I have never touched it again (been more than a year now)
in a nutshell - if the cab is warmer than the set temperature and the unit is started the air will be chilled and it will gradually warm the air as the cab cools down.
the old style one has fixed fan speeds and air direction regulator - The interior temperature is sensed by the cab sensor - try shooting some air in it to dislodge the lint/dust.
the temperature wheels you see operate the heater valve in pulses depending on what side needs what.