Automatically generates XML Sitemaps for your site and notifies search engines when they're updated.
Actually, it is. But it's not refreshed each time you save your posts and pages. Doing so would be far too resource intensive on large sites.
It's generated only when explicitly requested by visiting domain.com/sitemap.xml which is then cached in a physical file located in the /wp-content/sitemaps folder; until it needs to be refreshed once again.