What is #auto attribute here and why it is required

It is a template reference variable that allows us to get reference to html element or something else if we declare directive on this element.

We can declare template reference variable via (1)

• #var
• ref-var

#Default behavior

In most cases, Angular sets the reference variable’s value to the html element on which it was declared (2) .

<div #divElem></div>
<input #inputEl>
<table #tableEl></table>
<form #formEl></form>

In the preceding all template reference variables will refer to the corresponding elements.

#divElem     HTMLDivElement
#inputEl     HTMLInputElement
#tableEl     HTMLTableElement
#formEl      HTMLFormElement

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#Directives can change default behavior

But a directive can change that behavior and set the value to something else, such as itself.

Angular assigns references with empty value to component (3)

If we have component like:

@Component({
  selector: '[comp]',
  ...
})
export class SomeComponent {}

and template as:

<div comp #someComp></div>

then #someComp variable will refer to component itself (SomeComponent instance).

Angular doesn’t locate directives in references with empty value (4)

If we change @Component decorator to @Directive

@Directive({
  selector: '[comp]',
  ...
})
export class SomeDirective {}

then #someComp variable will refer to HTMLDivElement.

How we can get SomeDirective instance in this case?

Fortunately, Template reference variable can have value (5)

• #var="exportAsValue"

• ref-var="exportAsValue"

We can define exportAs property within @Component/@Directive decorator (6):

exportAs is a name under which the component instance is exported in a
template. Can be given a single name or a comma-delimited list of
names.

@Directive({
  selector: '[comp]',
  exportAs: 'someDir',
  ...
})
export class SomeDirective {}

and then use exportAs value as value for template reference variable within template (7):

<div comp #someComp="someDir"></div>

After that #someComp will refer to our directive.

Now let’s imagine we have several directives applied to this component. And we want to get specific directive instance.exportAs property is a good choice to solve this problem.

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Let’s go back to your code

If you open source code of MdAutocomplete component you can see:

@Component({
  ...
  exportAs: 'mdAutocomplete'
})
export class MdAutocomplete {
  ...

Since in your template you have

#auto="mdAutocomplete"

Then #auto variable will refer to instance of MdAutocomplete component. This reference is used in MdAutocompleteTrigger directive:

@Directive({
  selector: 'input[mdAutocomplete], input[matAutocomplete],' +
            'textarea[mdAutocomplete], textarea[matAutocomplete]',
  ...
})
export class MdAutocompleteTrigger implements ControlValueAccessor, OnDestroy {
  @Input('mdAutocomplete') autocomplete: MdAutocomplete;

because you’re passing auto variable to input within template

<input mdInput placeholder="State" [mdAutocomplete]="auto"

We can omit value and use only variable name in this case like

<md-autocomplete #auto>

but

• assignment value to value of exportAs property precisely indicates us where to get the instance.

• if md-autocomplete is a directive then auto variable will refer to HTMLElement.

So prefer specifying value for template reference variable if you doubt what it will refer to.