Good questions! I wrote up a post about this: https://puri.sm/posts/new-automatic-power-on-firmware-for-librem-mini/
TL;DR: Auto power-on turns on the machine whenever power is applied, like an appliance. So if your power goes out and comes back, or if you unplug it and plug it in, it turns on. This is handy for using your Mini as a router, NAS, etc.
After you pick Mini v2 you get a choice of which firmware you want. The only exception is updating PureBoot when you already have PureBoot, in that case just flash the update and enable the settings you want in the config menu. (The preconfigured option doesn’t come up in that case because you already have settings in PB that it will preserve when flashing, it ignores preconfigured settings from the update image.)