The "Use Fiddler Automatically" setting is equivalent to Firefox's "Use System Proxy" setting in Tools > Options > Advanced > Network > Connection settings. It causes traffic to flow to Fiddler when Fiddler is registered as the system proxy (e.g. shows "Capturing" at the bottom left). This setting basically makes Firefox behave like all other browsers.
"Force traffic to Fiddler", in contrast, sends traffic to Fiddler even when Fiddler isn't registered as the system proxy (or even when it's not running at all). This setting is useful only when you want Firefox to send its traffic to Fiddler but you don't want any other browser to send its traffic to Fiddler.