How Does an Automatic Transmission work?

The majority of vehicles on Australian roads today have an automatic or "auto" transmission. How these function is vastly different to a manual gear box.

Unlike manual transmissions in which gears of different diameters are brought into contact with each other to establish different gear ratios, automatic transmissions use two or more sets of planetary gears that can be configured differently to produce different output shaft speeds, in a process that is roughly analogous to how gear ratios on manual transmissions are produced.
Older iterations of automatic transmissions produced different output shaft speeds through the combined effects of engine speed, engine vacuum, and hydraulic line pressure.
However, modern automatic transmissions are electronically controlled with a dedicated transmission control module whose inputs derive from a multitude of sensors that monitor (amongst other parameters) the rotational speeds of several transmission components, the throttle position, engine speed, currently selected gear, and the status of one or more driver assist systems, such as stability -, cruise -, and traction control where fitted.
Essentially, engine power is transmitted to the transmission via the torque converter, which accomplishes two things.
The first is that engine power is made available to the drive train, while the second is that the engine drives a pressure pump that supplies pressurised fluid to all relevant transmission components.
If no gear is selected, i.e., the transmission is in neutral, the pressurised fluid circulates freely though the transmission, all clutch packs are disengaged, and no engine power passes through the transmission.
When a gear is selected, such as “D”, the transmission control module activates a flow control solenoid, and pressurised transmission fluid enters the valve body.
As the vehicle gains speed, the transmission control module closes one solenoid before opening another at predetermined shift points.
This has the effect of redirecting the pressurised transmission fluid from one hydraulic circuit to another, and with each redirection, the pressurised fluid disengages one clutch pack, reconfigures a set of planetary gears, and engages another clutch pack, with the whole process being somewhat analogous to gear changes in a manual transmission.
In practice, the combination of a torque converter lock-up clutch, sophisticated control algorithms, and real-time monitoring by many sensors make gearshifts in fully functional automatic transmissions largely seamless, if not undetectable when the vehicle is driven in full automatic mode.
In addition, sophisticated electronic control strategies also make it possible to incorporate two or more control modes, such as “Economy” mode to reduce fuel consumption, and “Sport” mode (or similar), which changes shift points relative to engine speed and load to increase performance, albeit at the cost of fuel economy.

Is an Auto better than a Manual car?

Most automatic transmissions that are maintained and serviced strictly in accordance with their prescribed maintenance schedules have no real, objective disadvantages over other types of transmissions, except for the fact that the maintenance costs of an automatic transmission on some applications are somewhat higher than the cost of maintaining a conventional manual transmission.

Does an Automatic car need to be serviced more often?

All vehicles need to be serviced regularly to maintain peak efficiency.
However, it's important to note that if an automatic vehicle is often used for towing or carrying heavy loads, the transmission fluid has to be replaced more frequently than the maintenance schedule prescribes.
This is because the additives such as friction modifiers, detergents, anti-foaming agents (and others) in transmission fluid get depleted or “used-up” sooner in transmissions that are subjected to higher loads, and hence, higher temperatures, than the fluid in transmissions that are not frequently subjected to high loads.
Plus, failing to replace transmission fluid regularly can cause a wide variety of issues, some of which can damage the transmission to beyond the point where the transmission can be repaired.