Nah no speedo connected at all.

You do bring up a good point, the speedometer and speedo cable isn't connected at all so the bike technically wouldn't know what speed it's doing.

But why does the CDI still need the circuit of the speedo?

Because if the CDI cannot "see" the speedo it restricts the power output of the bike.

The derestriction boxes and mods fool the CDI into thinking the speedo is still plugged in, so the restriction never cuts in.