Not a perfect analogy, but I drive a car with a top speed of around 100mph, but it is obviously still permissible for me to drive it on residential streets with a 25mph limit provided that I don't exceed the limit, and that is what I do. So why is there a distinction on where a Class 1 vs Class 3 bike is allowed when the only difference between the two is the theoretically top assisted speed (20 vs 28mph)?
In my state -- Michigan -- the law regarding e-bikes on multi-user paths, rail trails, and other off-road uses is that Class 1 bikes are permitted unless specifically forbidden, and Class 2 & 3 are forbidden unless specifically permitted. This leads to a lot of confusion, at least partly since I don't think I've ever seen a sign on one of these trails stating the local regulations. For example, the "Great Lake to Lake Trail" is a connected route using paved and unpaved trails that go all the way across the state, but is subject to the local jurisdiction of the various segments that make it up. Just locally here, we have one trail that is officially "Class 1 only" and another that is "Class 1 & 2", but you can ride right across the county line and be on what appears to be the same trail, but is now "Pedal assisted only" (IOW Classes 1 & 3, but not 2)!
In my mind, the issue is how fast I'm riding and not how fast my bike can go. I've been going for a walk on these trails and been suddenly passed by a virtual paceline of young hardbodies going at least mid-20s in their matching team kits, so it isn't only e-bikes that can be ridden faster than might be advisable.
My interest in this subject is mainly because I'm trying to decide on an e-bike and, although I'd be OK with a Class 1 bike, which is what my wife has, the bikes with the features I'd like to have tend to be Class 3. Fortunately, there's no way to distinguish the classes other than looking for the sticker (if there is one) and official enforcement is nil as far as I can see, so I'm probably OK going with Class 3 as long as I don't do something stupid on it. It's just that the current class distinction doesn't make sense to me.