We were strictly obeying the course boundaries, and had a terrible time getting through narrow gates where DARPA's waypoint file had a narrow width designed to guide us through the gates. If you look at videos of our runs, you can see the vehicle backing up and trying to get through a narrow obstacle. It's trying to get past a real-world obstacle on one side and a GPS limit on the other, which has narrowed the allowed path to where it can't quite fit.
So for the second run, I put in a patch to add 1 meter to DARPA's lane width. But I forgot to push it out to the vehicle, and we botched the second test run. It was in place for the third test run, though.
In the 2004 Grand Challenge, the bounds were much wider and most vehicles screwed up. As it turned out, you could almost drive the 2005 Grand Challenge by staying centered in the DARPA-defined path. But we didn't know that in advance.
My friend owns a Model S and on the way to lunch it got confused on off ramps and parts of the road that were not well defined by lines. It basically shut off autopilot and required my friend to take the wheel.
Driving with purely cameras isn't too far away.
See Comma's research: http://comma.ai/research.html
Arguably the biggest difference between the 2004 challenge (best distance was 7 miles) and the 2005 challenge (5 vehicles finished the race) was simply experience and refinement of existing technology. Stanford and CMU (top finishers) completed the race with very different approaches.
The Velodyne lidar was a prototype in the 2005 challenge and the first commercial version was extremely valuable to the teams that used it during the Urban Challenge. Google relied heavily on it and similar sensing technologies while developing their fleet, and many other groups going after full autonomy have also relied on lidar, so it certainly continues to be important. There's lots of different opinions on the future value of lidar vs vision. Camera quality and processing power + the effectiveness of CNNs are pushing a lot of people towards vision as a primary sensor.
There's also been a lot of progress for driving in urban environments in modeling, mapping, and prediction. A lot of this comes from collecting lots of data and building maps and behavioral models for objects the vehicle will interact with (cars, people...) Obviously for that the advancements in ML and deep learning don't hurt.