Does Sys Prefs > Software Upgrade > "Automatically keep my Mac up to date" automatically install Catalina on a Mac running Mojave?
No it does not.

I have Mojave and it installed several updates yesterday automatically but a major system upgrade has to be authorized manually. So it is telling me it is there and available but not installing until I give permission.

Edit: I have the updates checked in the advanced panel and it did not install Catalina. See:



I suggest it is a question of understanding: "install system updates" is relevant to the current system not changing to a new system