When you pay the automatic tipping, you are tipping your wait staff, both the waiter and asst. waiter, also your cabin attendant. Now, when you order a drink, they will automatically add a 15% tip to the price which you'll sign for and that will go on your sign/sail card. Keep track of all your onboard purchases, they do add up quickly.
They deduct appx. $10.00 per day, per person for the staff I mentioned above. At first I wasn't sure about having it done automatically, but it saves from bringing all that extra cash, it seems very easy.