That's my take on it as well. What's confusing is that this change only appears to be for the iPhone 4s and up (and iPad 3 according to posters). Basically what changed is:
1. Phone now always checked light level and adjusts in real time. Previously it would only check light level on unlock.
2. Phone now adjust brightness when screen turns on as opposed to after the phone is unlocked.
3. Brightness slider actually moves when adjusting brightness. Before it would it wouldn't.
4. User appears to be able to set a minimum and maximum brightness.
The problem is that none of this is intuitive and Apple never mentioned that they changed this setting. For what it's worth this appears to "fix" the "problem":
1. Turn on auto-brightness
2. With phone locked (i.e. screen off) go to the darkest place you can find. Unlock the phone and set the brightness to your preferred setting.
3. Lock the phone and go to the brightest place you can find (hold the phone under a lamp if you have to) and unlock the phone and set the brightness to your preferred setting.
At this point the phone should set it's brightness somewhere between the minimum value you set and the maximum value you set depending on the ambient light.
This only works for the iPhone 4S and 5 and iPad 3. My iPad 2 still works the old way where the slider doesn't move and it only adjusts on screen unlock. Why is this? I have no idea.