Infinite SEO Questions about Options

I am discussing the latest version of Infinite SEO and Wordpress in this thread.

On infinite SEO, I am confused about what Automatic Linking actually does? Does it actually make hyperlinks between words in your website to other pages/posts of your website (like hyperlinks that users can see on front-end)? Can someone expand/give a brief explanation about this?

Also, what taxonomies are normally excluded from sitemaps (say in wpmu.org) and what effect does this have on SEO -- I'm a little confused here?

Finally:
Main Blog archive Meta Robots Main Blog archive Meta Robots:
Noindex
Nofollow
Leave the first page alone, but apply to subsequent pages

What are the normal settings for this (say for wpmu.org)? (Is this only for the article's archive?)

I referenced wpmu.org a lot, because it's like my example for blogging-related questions & SEO, since I don't know much about SEO and blogs.