Checking the "Automatically change extension profile based on time of day" option will, depending on the time schedule you set right above it, will change the Extension Profile to "Away" and "Do no Disturb". While the Extension is in that status (and registered), it should follow the forwarding rules set for the profile it is in.
Yes, the "Lunch" and "Business Trip" statuses must be set manually if you want to use them. They also have one more use. When you manually set an Extension to one of those 2 statuses, the scheduled-based status switching will stop until you set the status back to one of the other 3.
The means that if you have e.g. "Business Trip" selected, that extension will stop switching between "Available", "Away" and "Out of Office" until you manually switch back to one of them.
Also FYI, you can change the names of these 2 statuses from Settings -> PBX -> General tab.