Automatic red-eye reduction settings work best on a pre-flash type of flash.
In a pre-flash system, the camera emits a small burst of light before the main flash to cause the subject's pupils to contract, reducing the chances of red-eye. This pre-flash helps to minimize the reflection of light from the retina, which is what causes the red-eye effect in photographs.
By using the pre-flash technique, the automatic red-eye reduction setting can effectively reduce or eliminate the red-eye effect in photos taken with a flash. However, it is important to note that the effectiveness of the red-eye reduction feature can vary depending on factors such as the distance between the camera and the subject, the lighting conditions, and the individual's eye color.