Wirelessly posted (iPhone 4S (64GB): Mozilla/5.0 (iPhone; CPU iPhone OS 5_0 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9A334 Safari/7534.48.3)
When you adjust the slider, you're setting a baseline brightness for the phone. If you really want to test the auto-bright function, unlock the phone while holding above the earpiece with your thumb. This will trick the ambient light sensor into thinking the phone is in a pitch-black room. Wait a few seconds and then remove your thumb. The brightness will automagically go up, just like it's supposed to.