It can't be the average MPG. The location of the arrow is never consistent with the average MPG value at the top of the display.
I don't think it's a linear average either (by linear I assume you mean average based on a product instead of a sum). Even if the value was weighted it still doesn't make sense because the highest average I saw on the display was 25.3.
For a while I thought that it was showing my "best" instantaneous MPG but that's not correct either. The highest average I saw on that tank was 25.3 MPG.
Maybe a moving target MPG based on how you've driven that tank and the best fuel economy the Jeep thinks it can get out of the remainder of the tank!?!? Total guess on my part to try to justify the existence of that arrow!!!
Jeep MPG arrow