AutoIndent is an option for cells that determines if a new line of text should be automatically indented so it is aligned with the previous line.
With the setting AutoIndent True, the next line is automatically indented by an amount equal to the white space at the start of the previous line.
With the setting AutoIndent False, you must indent each line manually.
With the setting AutoIndent Automatic, each line is indented by an amount determined by the depth of the last expression in the previous line. If the depth changes, by adding or deleting brackets, the indentation of the next line is automatically adjusted.
The options LineIndent and LineIndentMaxFraction determine the amount of indentation inserted.
If or \[NewLine] is used to create the next line, tabs for indentation will explicitly be inserted into the internal structure of the object representing the contents of the cell.
If \[IndentingNewLine] is used, only this character will be inserted, and indentation will be redone each time the expression is output.
See The Mathematica Book: Section 2.11.11.
See also: LineIndent, ParagraphIndent.