It doesn't make any decisions for the player. It simply makes it much quicker and less tedious to explore levels. It won't search for hidden doors, etc. It just runs around the level until something happens to stop it. It's a lot like shift+direction travel, except it won't stop when it hits a wall; it will turn around and go somewhere else.
I would not be able to play the game without that feature; it makes it that much better. If you have never tried it, you should be glad, because you have no idea what you're missing.

I think TE4 would benefit greatly from this feature. This is a great game, but the auto explore feature is the one biggest thing I miss from Crawl. It almost makes all other roguelikes unplayable to me because of the lack of autoexplore.