A new setting called “Limit audience reach” has been observed in Google Ads. This feature allows advertisers to choose whether their ads reach people outside their selected segments.
The setting offers three options: Do not limit reach (recommended), Limit reach to people matching only age and gender segments, and Limit reach to people matching all segments, primarily for retargeting when the advertiser’s own data is the only segment. The panel warns that using the “Limit all segments” option could significantly lower campaign performance and impressions.

This unconfirmed update suggests that, currently, Google Ads treats selected audiences as a starting point rather than a strict boundary.
This update was spotted by Arpan Banerjee.