The Autocrop Layer command automatically crops the active layer, unlike the Crop Tool, or the Crop Layer command which let you manually define the area to be cropped.

This command removes the largest possible area around the outside edge which all has the same color. It does this by scanning the layer along a horizontal line and a vertical line and cropping the layer as soon as it encounters a different color, whatever its transparency.

You can use this command to crop the layer to the dimensions of a subject that is lost in a solid background which is too large.