I've tried hard to use this element on many applications but each time I always find it falling short of what I need it to do so I just end up creating a custom element. My biggest gripes are the lack of a max height attribute for the dropdown and inability to do much in terms of CSS styling. It would also be pretty slick if it was possible to select multiple values.
I can see this being confusing, and someone wondering where all the options went. They come back if you click to edit and then manually delete the text, but not everyone will think of it.
The auto-complete feature is nice and <datalist> supports custom values that aren't in the preset list, but if you have a specific list of options and only want to allow those then it seems like <select> would be more appropriate.