Auto-GPT is designed to use a language model like GPT to automate tasks by breaking down a high-level goal into actionable steps without human intervention. For instance, if tasked with creating a business plan, it autonomously searches information, generates content, and analyzes data to formulate a plan. Unlike traditional use of language models requiring constant prompts, Auto-GPT utilizes loops to execute tasks iteratively and intelligently, showcasing self-sufficiency.