Here's a good visual example. What the Automotion effect does is the interpolation at the end.
You can also see how such an algorithm is not perfect and can cause some very bad artifacts. However, the results from TVs (Samsung's, Sony's, and Vizio's anyway) are never that bad, though it does in some cases cause bad enough artifacts to be unusable.
Wow, this one is even better to show how good these effects can be.
I am seriously wondering now if this is how Inception got its super-slow-motion scenes... nah Nolan got to spend as much as he wanted on IMAX film for Dark Knight, surely he was able to get some super-slo-mo cameras. Anyway