Kitting is the behavior achieved by "hit-and-run": moving out of target's range while kipping target in range. That, of course, requires both higher speed and range than said target. However, in AI War, many long-range units are slow, and many short-range units are fast.
There are few units in the game with builtin auto-kitting. For instance, the Zenith Bombardment Ship has a huge range and while it's rather slow, it's always good for it to keep its distance. Same thing for the Sniper. The Raptor is the only ship to combine both high speed (insane speed, in fact) and long range, making auto-kitting with it very interesting. The Space Plane has a special ability (radar dampening) which basically makes everything unable to target it past a certain range, and this range is shorter than the plane's range; as a result, this unit has a perk like "outrange everything". I'm sure I forget some other, but all these units have a "retreat range" perk displayed in their ID card. That feature doesn't requires the activation of the option you're speaking of. For regular ships, auto-kitting isn't required because they generally can't kite, because they have either a short range or a low speed. Often, the moves you'll have to do are more detailed than just hit-and-run.
For example, take a defensive move from frigate/fighter/bomber against an offensive move from a similar army. Hostile bombers will move toward the defending frigates: the frigates don't have the speed to escape their attack but they need to fall back in order to give time to allied fighters to intercept the offending bombers. Meanwhile, hostile frigates will follow the attack from a distance to provide anti-fighter coverage in order to protect the bomber assault. Defending bombers will try to counter-attack and move toward the isolated frigates, that's why hostile fighters need to play defensively and stay around their allied frigates to intercept the counter-attacking bombers.
In that kind of matchup, Attack-move (X-click) for attackers and FRD (V-click: free roaming defense) for defenders plus auto-kitting won't create that kind of tactical moves. Preferred target will help (with a specific ship type selected, manually target one of its preferred target then queue an attack-move with shift-X-click) but you deny yourself more advanced tactics like baiting or escorting.
All in all, auto-kitting + attack-move + preferred target will do more than a blind FRD, but to achieve true metal-efficiency, you'll need some tactical moves. While AI War is a game about macro decisions, it's also a game that values tactics. Don't let the features that help reducing the painful micro pull you away from the tactical layer below the strategical layer.