Auto regeneration is not working with _config.yml?

I believe you are correct; that changes to _config.yml always require restarting the server.

After all, _config.yml provides options that you can override in the call to Jekyll. So it is unclear how auto should behave if an option is called on the command line run of jekyll which overrides some of the _config.yml settings, and then the config is edited. Which would take precedence then? the _config.yml or the original command line argument?