When the AutoClose setting is enabled, SQL Server will shut down the database after the last user disconnects. This means that every time a new connection is made, SQL Server must go through the entire process of starting the database again. This includes reading the database file, allocating memory, and performing any necessary recovery processes. This overhead can cause a noticeable delay for users as they connect, especially if the database is large or complex.
Read on for several other factors affecting performance. I will say that the best use case for Auto-Close is when you have a dev instance—especially on a local machine—with a large number of databases and a very limited amount of RAM available. Otherwise, if this is a server, I’m turning Auto-Close off. Even today, I’d rather just buy enough RAM for my developers than flip this switch.