If you have Auto turned on, then the five-speed fan adjustment is adjusting the system's "intensity" levels. This means the system will still automatically adjust the fan speed, but with a tendency to use higher or lower average speeds overall, depending on which of the settings you use.
In other words, if you set it to Auto and set the fan intensity to its highest setting, the fan will automatically adjust, but it will tend to to blow higher than if you set it to a lower setting.
This is a huge improvement for me over my E90 system. I didn't have Navi, so there was no way to configure the Auto fan intensity and I found it to be much too low for my liking. I could dial down the temperature 3 or 4 degrees and the fan speed might not change at all. I had the car in for service several times but they found nothing wrong, and the loaners I drove were the same.
For some reason, BMW made the 60 degree setting on that model almost the same as MAX, where the fan never really dropped much below the maximum setting. 61 was like normal climate control, but often not cold enough. But 60 was just the fan blowing at close to maximum. So if 61 wasn't getting the car cold enough (which it often wasn't), I had to switch to 60 and then manually adjust the fan speed to get comfortable. Silly. I don't see why the car shouldn't have a temperature setting that's really cold on auto mode just to please people like me.
I like my car cold in the summer and I like being able to set the climate control to be more aggressive about keeping the temp down. I'd rather have a cold car with a noisy fan than the alternative. Now, I can set it that way and I'm happy. Really, my only gripe with my last car, but it was a big one for me.
2013 328i Sedan; Alpine White, Venetian Beige Dakota Leather, ZCW, ZLP, ZPP, ZTP, 688