Auto-scaling configuration in DynamoDB works by monitoring the read and write capacity usage of a table. When usage goes above 70%, the system increases capacity to handle more requests smoothly. When usage falls below 30%, it decreases capacity to save costs. If usage stays between 30% and 70%, no changes are made. This cycle repeats continuously to keep the table performing well without wasting resources. The execution table shows step-by-step how capacity changes based on usage percentages, and the variable tracker shows how capacity values update over time.