Can Set-DbaAgReplica filter any SqlInstances out
The command works at the Availability Group level - not database level.   Therefore ALL databases that have been added to that Availability Group will failover at the same time.  You cannot have some of them on the Primary and some of them on the Secondary.

If you need to have different databases failover at different times then put them in different Availability Groups.

So NO, it doesn't set all the databases to auto-failover, it sets the Availability Group to auto-failover.