> On one side of the coin, it logically makes sense that ATS systems would help recruiters pare down the list. I'd assume there is some auto-rejection happening, but how sensitive is it

When you have 1,000 applications for a job you don't care much about false negatives (having the system reject candidates you might have wanted). Instead you want the software to give you 100, or even 30 resumes to sift through in the hope of phone screening half of them, interviewing only a few, and getting someone who can do the job as quickly as possible.