Be careful, your Workshop only has a limited amount of space for your armor and weapons! It can hold up to 300 items. If you go over that amount, the Auto-Scrap feature will scrap your items down to 280 the next time you load up the game. Take care to scrap some of your unwanted equipment yourself if you notice your item count going too close to 300!
The Auto-Scrap always starts from your most low-level items of the lowest rarity. You will also receive XP from any items scrapped this way. Auto-Scrap doesn't scrap equipment of the legendary and epic rarity.
Note: Epic and Legendary equipment will not be auto-scraped.