An automated collection uses conditions corresponding to information belonging to products.
Taking the example of a collection 'Black Friday'. It's condition is the tag 'Black'.
Products using the tag 'Black' will automatically be present in this collection.
Another example: the 'Bracelets' collection will display products if their name contains 'bracelet'.
There are numerous conditions that you can configure on an automated collection, and you can see them on the configuration page of a collection within your Shopify backoffice.
The products > automated collections association is made when conditions set on collections meet the information set on products, to be modified in your Shopify backoffice.