The ambient light sensor dims the light in dark areas, to minimise glare and allow the user to see it easier, and brightens in light areas to make it more visible in sunlight.
Mine does not work at startup, only when I put it to sleep and then bring it back from sleep does auto brightness work. Seem lame that it doesn't change the screen brightness on the fly. Its hardly automatic if I have to put it to sleep and then wake it for the thing to work.