Purpose of the "Build Automatically" option in eclipse

Yes, you still have to do a build - but it's done automatically when you save (not an external build like an Ant build, but the "internal" build). If you didn't want to build on save, you'd uncheck the box. Having it build automatically makes some people nervous, I believe.

Eclipse has a good answer on their website:

You have two modes of working: auto-build mode and manual build mode. By default, you are in auto-build mode and Eclipse takes care of compiling source files automatically. Builds occur automatically in the background every time you change files in the workspace (for example saving an editor). Auto-build is convenient because it means problems view, binaries, etc. are are up-to-date at all times. The downside is that in large workspaces auto-builds can be time-consuming if you are changing files in projects with lots of downstream dependent projects.

If auto-build is taking too long and is interfering with ongoing development, it can be turned off. Once in manual build mode, the user is in complete control over when builds occur and what gets built. Project > Build All (Ctrl+B) can be invoked at any time to trigger what auto-build was doing automatically. This allows you to build up a larger set of changes before invoking a build (Eclipse remembers which files have changed so that it does not have to do more work than required when you do ask for a build.

Note that when they say "auto-build mode" they mean if you have checked "Build Automatically", when they say "manual build mode" they mean you do not have "Build Automatically" checked.