What Greg said is exacly the reason. If I remember correctly from SAE standard, it should take about 60-90 seconds for the needle goes from empty to full when you connect the circuit. There are different methods to apply that:
1) using silicon oil inside the cage of fuel guage. This will damps the noises and fast movements of float in the tank as it doesn't let the inside magnet moves fast.
2) Using an integrator, usually a digital one to smooth the behaviour.
3) In some VDO models (or maybe others as well) the fuel tank is divided to two parts with a vertical plate, One of them is very small comparing to the other one. There is a very tiny hole at the bottom of this plate that lets the fuel flow from one side to another. Sensor is located in the small part and as you may guess, when there is a fast change in the big tank, smaller part doesn't FEEL it. This little hole plays the role of a delay and kind of integrator.
Sometimes there is a combination of two methods, which is usually methods 1 & 2.
Cheers
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