only the 1500 trucks have the 'auto' feature available, its not heavy enough for our trucks..
How it works is:
when you select "auto 4wd" on the switch, the front axle locks in as it normally would in 4wd. The transfer case goes into a "ready state" in which it monitors wheel spin varience from front to rear. There is a large clutch pack in the t-case similer to an automatic trans. The encoder motor also acts as the apply to the clutch pack, when the clutch pack is engaged, it transfers power to the front diff. The clutch is normally released which would be like running in 2wd and when it senses slip it locks the clutch until slip is gone, the front axle is locked and ready for it so for the most part, you dont feel it. The big stuff in the HD trucks is more standard as far as engagement goes, encoder moves the shift fork which is hooked to a syncro that locks the planetaries..