With Android Auto, the screen in your car acted like a dumb terminal and just mirrored a virtual screen running inside your phone (the android auto app). So your cars display would simple display the hidden screen in your phone and send touch-screen touches to your phone. So basically the "Android Auto" part of your car was just a slave "display" and had no android operating system running in it.
But with Android Automotive, the actual display runs the android operating system, so it's a full-blown device and not just a display.