About Automatically-Generated Texture Coordinates  The system can use the transformed camera-space position or normal from a vertex as texture coordinates, or it can compute the 3 element vectors used to address a cubic environment map. Like texture coordinates that you explicitly specify in a vertex, automatically-generated texture coordinates can be used as input for texture coordinate transformations.

Automatically-generated texture coordinates can significantly reduce the bandwidth required for geometry data by eliminating the need for explicit texture coordinates in the vertex format. In many cases, the texture coordinates that the system generates can be used in concert with transformations to produce special effects. Of course, this feature is special-purpose, and there will be many occasions in which you will want to use explicit texture coordinates.