Auto-trace software (such as Adobe Illustrator's Image Trace) produces jagged paths, incorrect colour groupings, and unnecessary anchor points that create problems in production.
Hand-tracing produces clean, smooth paths with correct colour separations, a professional file rather than a converted one. Every path is placed intentionally by a human expert who understands how the file will be used in production.
This is especially important when the vector file is destined for embroidery digitising. A clean vector file makes the digitising process faster and more accurate, and a poor-quality auto-traced file makes it slower and less accurate.