My system works well with AC on, auto recirculation, and system Auto as well. If needed, you can use the max defrost button (on the left) to temporarily defrost/defog the windshield and 2 front side windows.
The only situation where I can see someone using manual mode is if you're driving with the windows/sunroof moderately/wide open, in which case it might be a good idea for you to specify the location and intensity of vented air.
I keep the intensity on 2 bars out of 5. I think the reason you get an intensity control even in auto mode is that the system lets you control how "fast" it can try to adjust the cabin temperature to what you set.
I should probably test this when it gets hot in the summer. Basically let the car heat up, then turn it on, and if my theory is correct, then it would take longer for the interior temperature to cool down to your set degree if you have the auto intensity on 1 bar versus 5 bars.