Auto puffy ack works as follows:
As soon you get into range and are above 3k the ack will target you. The bursts do indeed appear magically around your plane (no actual shells flying) within an imaginary box. The size of this box, and thus lethality, is depending on your flight state, speed and maneuvering (G-load). The slower and more steady you8 fly, the smaller this box gets in which the bursts appear.
If several targets are in range, the puffy ack will prioritize them by distance and type, bombers will be targeted more likely than fighters.
Two things should be noted: There is no line of sight check or something like that, in some rare cases you can get targeted by puffy ack when behind a mountain for example. And second, bomber drones are by some unknown reason (glitch? bug?) immune to puffy ack, only the lead bomber gets hit.
Small (non-puffy) auto ack actually aims and shoots at you. Both types of ack never aim at friendlies, but you can get damaged or even killed if you get in their way.