The key is Undo-Redo information is lost. On Google Docs you can "time-travel" almost on a keystroke level, so that's when auto-save makes sense.
Update, answered in detail here: https://news.ycombinator.com/item?id=42016231
Update, answered in detail here: https://news.ycombinator.com/item?id=42016231
(in other words, it's not necessary at all to support this feature from the ground up - it just might be necessary in order to have a third, even better way than "no saves" and "imperfect saves")