"close range" voltage protection with TVS
You're correct in your understanding.

However as long as the max breakdown voltage of the TVS is comfortably within your 40V upper limit, you'll probably be fine as the spikes will be largely suppressed by the TVS.

You want to make sure that the standoff voltage (VR or VSO) is above the voltage that you are planning on running at. If you will run at up to 29V normally, a 28.5V TVS is not ideal, a 30V one would be better.

You could additionally add something like a 10R resistor in series with the power line (with the TVS on the regulator side of the resistor). This would further limit the spike voltage by acting as a potential divider with the TVS.



However I would be more worried about your choice of regulator. A linear regulator converts all of the excess voltage to heat by dropping it across a transistor acting as a resistor. With a 25V input and 5V output, that means 80% of the power is wasted, and the regulator will dissipate 4 times more power than your load.

Even drawing 50mA which would be easily do-able with a small MCU would result in 1W dissipation in the regulator - it will get very warm. At you 100mA to 200mA estimate, you are looking at almost 4W of dissipation which will need some serious cooling - at the very least a large heat-sink and some decent air flow. With no heatsink, you are looking at a temperature rise of about 65*C/W (from datasheet) - so 4W would put you at a barmy 260*C above ambient.

A better option would be a switching regulator circuit to step down from 24-29V to something more reasonable like 6V or so, and then a linear regulator to bring that down to 5V. Using a linear regulator to go the last little bit helps reduce some of the switching noise from the DC-DC.