These machines come with a buttonhole foot like this one:
You set your button in a slot in the foot and the machine sews all the stitches (bottom, top, sides) automatically as the foot moves along. It will usually stitch the bottom side then moves up one side until it senses the button's size and then it continues to stitch the top before moving down the final side to close the buttonhole off. Some fancier machines have fine computer sensors in their buttonhole foot, but most are just a piece of plastic or metal and function mechanically.
You don't have as much control getting an automatic buttonhole made, but it usually is easier. I have machines that have "one step" automated buttonholes, and I have another machine that has a 6-step mechanical buttonhole. Honestly I prefer the 6-step machine but I just enjoy the process of choosing when to do each step with a dial but this also means I have to measure my button size and make appropriate guides instead of just plopping in the button into the foot.