Auto-Defense and Defense Skill obvious question.

Defense has nothing to do with Auto Defense, period. Using Defense with a Shield seems to "trigger" magic and ranged Auto Defense, but otherwise its just normal Defense triggering with an aesthetic added onto it.

Auto Defense DOES NOT increase defensive stats; that's Passive Defenses and they simply have Auto Defense integrated into them. Auto Defense just completely negates stun. Melee Auto Defense is a slight exception that it halves all damage after calculations, but that isn't the same as increasing defense/protection.

So triggering Auto-Defense does not cause you to gain the Defense and Protection listed by the Defense skill, I see. Does Auto-Defense not reduce incoming damage at all when it activates, and instead just has a tendency to only activate against things that already don't hurt?

Defense skill doesn't say anything about Auto Defense. All it does is just increase your Defense and Protection by a flat amount while loaded; that's it.

Except for the melee auto defense, no it does not reduce incoming damage.