Auto-bridging allows you to trade currencies by going through an intermediary currency. Ex. On the XRPL, most currencies have an XRP exchange rate, which can be used to automatically get an exchange rate from A -> XRP -> B.
Auto-bridging allows cross-currency exchanges by trading through an intermediary currency. Instead of needing a trader who is willing to trade ABC for XYZ, as long as there is a trade from ABC to a common currency, and a trade from that currency to XYZ, you can find an exchange rate. This is especially useful for less popular currencies where direct exchanges may be infrequent. The XRPL uses its native currency XRP as the central currency for auto-bridging, and most issued currencies on that network will use their XRP exchange rate to auto-bridge to any other token.