Lion will quit your running applications behind your back if it decides it needs the resources, and if you don’t appear to be using them. The heuristic for determining whether an application is “in use” is very conservative: it must not be the active application, it must have no visible, non-minimized windows—and, of course, it must explicitly support Automatic Termination.
Shawn and I were talking about how Lion needs this feature on the podcast we recorded yesterday. I had no clue Lion supported this and the implementation sounds near perfect. ((Likely I had no clue about this because apps must support it, and when you beta test a new OS it is pretty rare to test apps designed for that OS. Good catch by Siracusa.))