Drone shots from action cams aren't as sharp as you think.
Look at this picture I found on google, it looks razor sharp right?
Now get close tot he screen and look close up at the catamaran in the centre of the picture. It's actually quite blurry close up. The people on deck are just splodges of colour, you can barely make out the ropes along the edge of the deck. Take a look also at the RIB in front of it. Standing back from the picture also sharp. Close up, there's no visible detail. A white splodge that's the driver and passenger, a red splodge that's a kid and you can barely make out the grab ropes strung along the side of the tube. The boat itself is a pretty uniform white shape. The centre of the picture looks the sharpest by the beach. But again look closely at the palm trees, you can't see a single individual leaf. The sailing dingies on the shore and the boats close up are just splodges of colour. I'd suggest this is a good example of how Depth of Field gives a picture an overall sharp appearance when in actual fact a lot of detail is lost beyond the focus point.
Read the discussion about DOF we had in this thread where I posted a picture from Google showing a dash cam type shot using what's specified as a GoPro :
https://dashcamtalk.com/forum/threads/hd-cameras.21864/#post-288146
Anyway factors for un-readable number plates (general factors and no reference to any cam in particular):
1. Fixed focus lens & DOF - many car cams and action cams used fixed focus lenses, usually focused to a very short distance from the camera, often a few inches, because by making the foreground ultra sharp and using Depth of Field to give apparent sharpness to the background, you can trick the mind into believing the whole picture is really sharp. In reality, the object at the focus point is sharp, and everything else is rendered sharp by the DOF effect by the camera using a small aperture. Whilst DOF gives an overall sharp appearance to the picture, fine detail is usually actually unsharp. Hence why in the picture in the other thread, the picture overall looks quite sharp but the number plate of the 2nd car on the right is unreadable even from about quite a reasonable distance. In fact so much detail is lost that you can't even really make out any lettering. The only way I know to overcome this is - 1. Change the fixed focus to a point further out - you'll still have exactly the same issue, but by changing the focus point to say 10 feet, you can ensure that number plates at 10 feet are clear and then drop off in sharpness from there as they get nearer or further away. 2. Use a video camcorder with autofocus and hope it will lock onto the car coming towards you.
2. Data rate as Ian says. The more information (detail) in the picture, the harder the camera has to compress it to fit it into the size of video file that the camera is locked into producing. eg. Video a sentence on an otherwise blank static piece of paper, and the compression rate will be very low (unless the paper has visible texture) because there's very little information on the screen and very little changing from frame to frame. By contrast, drive down a tree lined street, and each tree has millions of leaves, plus the motion means large amounts of data are changing from frame to frame so the amount of data the camera can discard as carried over from the previous frame is very low. The result is in order to try to record the picture as seen, the camera has to compress the data very hard to make it fit the file size, and compression involves discarding detail. That's why an in car video with a tree lined road typically shows a lot of blur in the trees and / or macro blocking (the appearance of squares). As Ian says, the answer here is to either use a more efficient compression codec such as H.265 (which compresses without as much loss of detail), or to up the data rate. A higher date rate = the camera compresses less and so discards less detail with the result, the picture is sharper, contains more details and less artefacts. There is a point of course where there is little to no return. However, this should be quite high as many professional video cameras use data rates around 100mbs. I think it's fairly safe to assume the broadcast video industry have done their research.
Personally, I disagree with Ian a little here about the significance of overwriting the data with a high data rate cam. Most car cams automatically or manually by pressing a button, allow you to instantly protect the footage at / after an impact is detected. Secondly, even those that don't such as action cams, will still allow you to protect individual files manually. So after an accident, you can simply stop the camera when you're finished at the scene and protect the last couple of video files. If the camera won't do that, simply carry a 2nd memory card and swap them over after the accident flicking the overwrite protection switch on the side of the one you take out (stops you accidentally putting the wrong one back). I use a GoPro 2 currently in my car since dropping my Mobius onto it's lens, and on my commute which is about 1/2 hr each way, my 32GB SD card lasts about a week before I have to reset it (the GoPro 2 doesn't have loop recording), and that also includes non commuting journey's as well.
3. Lens / sensor / chip quality - no matter how good the data rate, focus, etc. ultimately a camera can only record the quality that's fed to it by the lens. The better the lens, the better the picture. Hence why a consumer lens on a digital SLR camera cannot come close in picture quality to the same picture on the same SLR taken through a professional lens. Beyond that, the sensor and processor also play a part in overall quality.
Personally, from what I'm seeing atm, the Yi 4K is the best quality action / dash camera out there in my opinion, if you're prepared to use an action cam in a car, although the Eken 8 pro seems to run it very close for a fraction of the price. I've only viewed online videos though so the actual reality could be different. All I can say, is that if I could afford it, I'd buy a Yi 4K atm myself, as I value quality over dash cam convenience and don't believe in GPS recording (why hang yourself if you accidentally go over the limit by having your speed recorded!).
That said, no fixed focus camera is going to give readable plates at distance if it's focus is fixed to a few inches. If you want plates readable at any distance, then you're going to need a camcorder / or a good video SLR such as Canon 70D, put up with the size / hassle of removal of a large camera and hope that the autofocus locks onto approaching vehicles and not simply down the road.