I had a stuck gauge because the damping fluid dribbled out, and covered the bell which is driven by the rotating magnet. so it was sticky until i drove the bike fast enough, the needle would then jump to the correct speed. after a thorough cleaning my needle moved freely and without twitching, i didnt even had to mess with the dampening.
the tiny cylinder is just a hollow container, and the damping fluid is sloshing around in it. its usually quite viscous, some people had success filling in silicone oil which you can get in tiny amounts (but all kinds of viscosities) for RC-Car-shocks.
You know the trick to distinguish a hardboiled egg from a raw egg (without cracking it open)? spin it on a table, then quickly stop it and immediately let go again. if it continues spinning (or at least lingering), its raw, because the liquid inside still spins, dragging the shell along. a hardboiled egg stops completely.
Same goes for that dampener. its just a container that rotates with the needle shaft. the mass and viscosity inside the container dictates how quickly it can accelerate: too little mass, or to thin (like Isopropyl alcohol which is a bad example because it would evaporate quickly), makes the needle very jumpy. too much or thick (gear oil, maple syrup), and the needle becomes very heavy and slow to response, or makes it overshooting.
you could try drilling a small hole from the side, fill it with a syringe (use a decent sized needle, or you'll be filling forever trying to force viscous liquid through a thin capillary), then shut the filling hole with a tiny set screw, or a dab of glue which isnt bothered by silicone (i know no glue who could do that).
