Question about AutoModel 'Turn into Classification' method

So, when I choose that option what exactly is AutoModel doing? Is it running a regression and then just labeling the results according to the categories I've set or is it actually transforming the labels into categories and then running a classification task?

And while I am at it, what are your thoughts on these two approaches?

At least in my data I seem to be getting better results from running the regression and re-labeling the results afterwards with a simple if statement.