So auto on / off is engaged with a reed switch and spoke mounted magnet. Auto on is more of a user convenience than a battery saver - you never need to think about turning your back lights on again. You will be seen when you ride. The reed switch doubles as a way of determining velocity. When the wheel velocity changes by a certain set amount, the brake lights will engage (three red backlights flash solid, then stay solid). It waits for either an increase in velocity or a time duration to turn the running lights back on. Turning is signaled with front mounted switches (teal switches in the pictures). One on either side of the front light. Currently, they turn on for about 5 seconds then shut off. There's a couple improvements that could be done with it (if stopped, keep blinking until a speed increase), but I haven't done that yet. When blinking is engaged the back lights stop running, the center light stays solid, and the amber LEDs blink at a frequency similar to that of cars. The front light has three modes - on, solid, flashing. Holding down one turn switch will engage the front light, holding down the other turn switch will cycle modes (flashing, solid).
Originally - I wanted it to be accelerometer based, but as you may know, the roads are not very smooth, so any bumps will affect the measurements significantly. The reed switch offers silky smooth data - as the data gets integrated over one wheel rotation, it's extremely noise resistant.
Ah and your main point - communication between cars and cyclists - turn signals allow cars to know where I'm going, the brakes will let them know when I'm slowing, and the automatic lights will make sure they can see me. Be seen, be safe, be smart. It's not a perfect solution, but I think it's a step in the right direction. There's a lot of aggression between cyclists and drivers, this might be something that can allow the driver to anticipate the actions of the cyclist.