When a ship is in the territorial waters of another country, she may exercise freedom of navigation but still need to report when required for security reasons.
The superpowers – the British Empire, Soviet Union and United States – initially claimed a territorial width of 3 nautical miles. That was back in the 18th century and based on the distance of a cannon-ball shot.
Many incidents such as nuclear warhead testing and fisheries disputes have spurred some nations to extend their maritime territory to as much as 50 or even 200 nautical miles.
Since the 20th century, maritime territory has been standardized to a ‘12 nautical mile’ limit that has been universally agreed upon.
It makes no sense for a country to claim less territorial waters than is permitted. It is like being granted a salary of $12,000 but you insist on receiving only $3,000.