In Automated mode, Sim Settlements 2 will run basically everything for you in the background. No need to stress about the needs of the settlers, the SPECIAL stats of your settlers for more advanced plots, or the costs and difficulty of running a settlement. The option you choose when you're more fussed with seeing a glorious settlement build around you, without the hassle of putting in the work yourself.
In City Simulator mode, Sim Settlements 2 expects you to put in the legwork to help rebuild the Commonwealth. Your resources are divided into four easy-to-understand categories; Building Materials, Organic Materials, Machine Parts and Rare Materials, allowing you to focus on the basics of what you need rather than the specifics. SS2 will also expect you to think about the dynamically changing needs of your settlers, and to meet these needs in order for your settlements to flourish and upgrade.
In Hardcore Mode, Sim Settlements 2 throws you into the most immersive and difficult settlement-building simulator this side of the Capital Wasteland. Your resources are now all individually tracked, so you need to find specific costs to keep your settlements running. Just like in City Simulator, Hardcore expects you to maintain the dynamically changing needs of your settlers and to meet those needs in order to grow and expand your settlements. Finally, in Hardcore Mode, shops require you to make your own stock to sell with Industrial Production plots, Food won't be produced in Agricultural plots without meeting the Water needs of the settlement, and you need a steady flow of caps to maintain your Turrets, Generators and Water-producing items.
Alternatively, if you wish, you may customise your own difficulty settings by changing dozens of different settings in the City Manager 2078 holotape or terminal to suit your own play style to the last detail. A chart is linked here that lists the different options the holotape provides, including difficulty settings.
You can also just change the Resource Difficulty and keep your Gameplay Difficulty the same.
If you also want more information about resource categories and individual resources, please follow the following link.