The auto-manager has several tools at its disposal. It can pinch-hit, make a defensive replacement, try for extra bases, and make a pitching change.
Pinch-hitting will be done only if the "ph" spot at that position is checked (by default, it won't be). In this case, in a high-leverage late-game situation (only if the team is tied or trailing), a player will be pinch-hit for by his replacement (or chained replacement; see the manager doc for more details). Similarly, defensive-replacement will be done only if the "def" spot is checked, which will happen in high-leverage late-game situations where the team is ahead.
The extra-base decision is discussed in the engine document.
Three factors go into determining whether or not to pull the pitcher: 1) The pitcher's fatigue. 2) The leverage of the situation. 3) The number of outs the auto-manager thinks it can get from the bullpen that are better than the starter at current fatigue level, if high leverage (or mumble if low leverage).
Specifically, if the ratio between (3) and the number of outs remaining is greater than 1 (if severe leverage), 1.5 (if high leverage), or 2 (if medium leverage), the pitcher is pulled. The pitcher that comes in will be the best pitcher available (if severe leverage), the second best pitcher available (if high leverage), the best untired pitcher if it's not the relief ace (if medium leverage), or the worst untired pitcher available (if low leverage). I'm glossing over a couple of unimportant details here.
"Severe leverage" is not as narrow as it sounds -- it includes almost all save situations, as well as situations with runners on that happen before the 9th, and the relief ace will come in at the start of the 8th if the game is tied or you are up by 1. The relief ace for a game is defined as the person highest on the charts for that game (adjusted for existing fatigue and handicap).
To be precise, severe leverage is given by:
ROB - ABS(DIFF-0.5) - (9-INNING) + 1.5 >= 0
where ROB is runners on base, DIFF is the score differential (positive = pitching team is ahead), and INNING is the current inning. The earliest the relief ace can be called in is with the bases loaded in the 5th inning in a tie game or a game where the pitching team is up by 1 (to clarify, this does not mean that the relief ace will necessarily be summoned here; the starter may stay in. However, if a pitching change is made at this point, the reliever coming in will be the relief ace.)
The auto-manager can also GM. This is relevant in two ways: first is formulating a draft order, and second is making roster decisions and making a lineup after spring training.
For the draft order, the auto-manager looks at the scouting report and drafts players based on a combination of OPS, defense, and franchise need (measured by how good the incumbent is at a position).
After spring training, the auto-manager will select its major league roster. It will pick hitters as follows: starting at the bottom OPS-wise (all OPSes are based on the last 3 springs; regular season is NOT counted; this is adjusted for defense), it will send any player to the minors for whom there are still two players left who play that player's position. This will usually not be enough cuts, so it will start at the bottom again and send any player to the minors for whom there is a better player at their position, except for catcher: it will always have two catchers on the major league roster. Once it gets down to 13 hitters, it will stop. It will do something similar for pitchers: cut them starting at the bottom, subject to the constraints of keeping exactly 3 starters, at least 1 middle reliever, and at least 3 relievers (leaving one flex spot for an MR/RP).
It will then examine its minor league roster (limit of 5) for waiver candidates by looking at a mix of defense-adjusted OPS and age, waiving any extra players until it gets down to 5.
Once the roster decisions are done, it will make a lineup and backup and pitching instructions. The lineup is simple: for each position, it picks the highest-OPS player (adjusted for defense), and then picks the highest remaining OPS player to serves as DH. Its lineup construction just goes in descending order of OPS. This may be fleshed out, but probably not; I don't expect many people to use the auto-GM.
The backup assignment is a bit more complicated, but basically it will use the best bench player at a related position, where best is again determined by highest-OPS. It may do this somewhat intelligently (if you have a native 2b at 3b, to bench your 2b it will move the 3b to 2b and use a backup 3b if one exists, etc.)
For starting pitching, it will sort the starting pitchers in terms of OPS (as always, average of last 3 springs) and give each a 1-fatigue advantage over the next one. So if A has a .750 OPS, B has an .800, and C has a .900 (allowed), the chart will be:
A,0 B,1 C,2which represents a priority of A, A with 1, B, A with 2, B with 1, C, etc..
It will do the exact same thing with relievers. The worst aspect of the auto-manager is probably that it places zero emphasis on regular season stats.