Hi Andrew,
You are using basic scaling which is different from manual scaling. In basic scaling instances are created on demand to handle request and automatically turned down when idle. The maximum number of instances that can be created is defined in the max_instances parameter. To read about types of scaling available in App Engine Standard please visit the link on [1]. Having said that, it does seem like a bug to me that the maximum instances is showing as auto. You can report this on Issue Tracker as a bug.
[1]https://cloud.google.com/appengine/docs/standard/python/how-instances-are-managed#instance_scaling