Hi,
This VMware blog article is perfect. It is not a good practice to enable the option on a production environment, because not all operating systems behave the same way.
Automating Upgrade of VMware Tools and VM Compatibility - VMware vSphere Blog
Upgrading Tools Automatically on Reboot
Using VM options to keep VMware Tools up to date is also another method to automatically keep VMs up to date. Enabling the “Check and upgrade VMware Tools before each power on” advanced setting use to not be used because of the additional reboot it would cause for virtual machines. Keep in mind that with Windows Server 2016 VMware Tools no longer need a reboot on upgrade, it can be safe to enable this setting and have VMs stay up to date on every reboot. However this may not be applicable to all situations, so another recommendation would be to enable this for a lab environment or non-critical workloads.
The easy way to enable this option is to log into the vSphere Client, edit the VM settings and enable the setting.
ARomeo