In this placement mode, point label candidates are generated following ideal cartographic placement rules, eg labels placements are priortised in the order:
(respecting the guidelines from Krygier and Wood (2011) and other cartographic master works)
Placement priority can also be set for an individual feature using a data defined list of prioritised positions. This also allows for only certain placements to be used, so eg for coastal features you could prevent labels being placed over the land.