The new automatically created member account will use the submitter's/buyer's email, and the username will be the pre-@ part of their email address (if that's taken, random letters and numbers are added). You'll almost certainly want to allow people to change their usernames at least once: in WSN 9.0+, go to Admin -> Members -> Manage Usergroups -> [select group] and set the "Username changes allowed:" permission.
Their autogenerated login will be emailed to them. The listing being submitted will be automatically associated with the account. If the email used in the listing submission matches an existing account, the link will be associated with that account and no new account will be created. Notice that a different email from the normal registration email is sent out when autogenerating (except in the case of cart payments, which use the normal email): email_autoregsubject and email_autoregbody are the language items if you want to edit the text of the email at Admin -> Customizations -> Language.
To make autogeneration of accounts be optional for the listing submitter, you can leave the switch off but place
Autogenerate an account? <select name="sendinvite"><option value="no">no</option> <option value="yes">yes</option> </select>
in your 'submit listing' template (Admin -> Themes -> Manage Templates -> Submit Listing) instead.Occasionally you may want to retroactively autogenerate accounts for people who submitted listings before you started autogenerating accounts. You can do this by doing to yoursite/wsnadmin/legacyautoreg.php and letting it run to completion.
Important Note: For a software directory, when you import PAD files through the admin panel while the autogenerate accounts switch is on, it will autogenerate accounts to own the software listings in the PAD file. Remember this means it'll be sending out a lot of welcome emails to people who may not want them. Also note that if you want to generate these for existing listings in the pre-loaded database you'll need to run wsnadmin/padupdate.php.