Its purpose is to maintain constant pump pressure within the system.

The Auto By-Pass valve automatically opens and closes depending on system load. 

When the Thermostatic Radiator Valves are opened and calling for heat the Auto By-Pass valve remains closed. 

This allows the full output of the boiler and pump to circulate through the system. 

As sections of the heating system close down the Auto By-Pass valve opens to allow water to flow through the by-pass.