Velocity typically does not run in ERG mode, but instead applies road resistance and gradients to simulate real-world cycling. This is by design and better empowers the cyclist to learn critical cycling skills and gear management.
There are some exceptions like a ramp test or specific drills where a coach may prescribe ERG intervals.
What is ERG mode? ERG mode is when the trainer automatically adjusts resistance up or down to assist a rider to hit the power + cadence targets. If a rider slips below the intended target (ie 90% of FTP), the trainer will apply more resistance to help push the rider into the target zone. While this can be helpful to get riders to achieve the prescribed effort, it does not simulate real-world cycling and does not develop important shifting skills.
In "free ride" mode, the trainer simulates the resistance a rider would experience on a flat road or applies the correct resistance for a simulated grade in an interval step. Velocity calculates the resistance based on the weight and speed of the rider using a proprietary algorithm.
If you find that you're hitting the cadence target, but your power is above the target output, you'll need to shift down a gear to generate the right power at the right cadence. Vice versa, if you're hitting the power target, but above the cadence target, you'll need to shift to a harder gear to lower your cadence while hitting the correct power.