It does not work by default and it does require input from the developer. The UIKit API allows you to detect that you have it enabled but it doesn't magically redefine all the colors for you.
Not quite. If you use the UIKit system colors, it requires no work from the developer. The colors are semantic and automatically adapt to light/dark mode and high contrast mode. It only requires manual work if you have custom colors, or you do your own drawing.