WordPress.org

When does the welcome panel normally show?

The welcome panel shows for the initial user when WordPress is installed.

For multisite, the welcome panel shows for owners of new sites. WordPress uses the following rules:

1. On site creation, a flag is set for the user to show the welcome panel the next time they visit a site they own, as long as they've never seen the welcome panel before.
2. Once the user dismisses the panel on one site, it is dismissed on all sites they own, and they will not see it on new sites.
3. An owner is determined by comparing the site's admin email to the user's email.
4. The panel is still accessible via the Screen Options tab.

Does this retroactively hide the welcome panel for sites created before the plugin was installed?

Yes. It is assumed that if you're installing this plugin, you don't want any site owners to be presented with the welcome panel, regardless when the site was created.