Check the playback mode as well as the preference
An enabled automatic-quality preference does not establish that the current video is using an adaptive conversion path. If a stream continues buffering at original quality, inspect whether it started as Direct Play or Direct Stream. The preference and the actual session mode are different pieces of evidence.
Apply Plex’s documented boundary
Plex says automatic quality requires transcoding and cannot dynamically change a session already playing original quality. It also says a session started with Convert Automatically does not automatically become Play Original Quality. The control belongs to the player app, while server limits can constrain the bitrate. The server must also be capable of conversion; enabling the preference cannot add that capability to an unsuitable device.
Choose a meaningful comparison
For example, an authorised remote viewer can inspect the app’s quality choice and the source server’s actual reported mode before testing a lower supported quality. Keep the same item and connection while comparing one change. A successful lower-quality converted session does not prove that the original file became smaller or that every device now supports the same path. Restore the viewer’s preferred setting if the comparison is unhelpful. For support, report the original mode, app setting and observed result, rather than saying that Auto Quality should solve every interruption regardless of how the media is delivered.
Questions, answered
Does the app preference make every Direct Play session adaptive?
No. Plex says automatic adjustment is used when the video is being transcoded.