Check the docs. They have a decent section on automatic widget layout. I've never used it because the layout algorithm would change in unexpected ways as new versions of PS were released. With manual layout, I am able to precisely control the layout so I have UI code that works predictably as far back as CS and CS2. Things may have stabilized with the automatic layout over the past few revs and if you don't need to support older versions of PS you should definitely try it out.
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