Has “set time automatically” ever worked in Windows?
Yes. Works now, even. Without context it's impossible to know what you're asking.
I have set up multiple computers with the option enabled and the time never updates.
Also traveling between time zones with this option enabled, as well as "set time zone automatically" does nothing.
Do you have personal experience with it working? What is it supposed to do?
It's supposed to set the time automatically?
AFAIK it just does NTP lookups. I don't know how often it's supposed to do that, IIRC there's a registry setting to set the poll interval. The time server used may impact functionality, e.g., the default MS time server may be timing out; you can try a NIST server.
Moving between time zones, don't know, hit or miss depending on various settings. Also, IIRC, it depends on your IP address, which is not always a good indicator of geography. Location services would need to be on as well (I think).
Updates may affect your settings, e.g., occasionally I've found my "update automatically" or whatever it is reset. I've never had to start the time service myself, but some people have, so that's something else to check.
It always works for me, maybe there's something wrong with your settings?