From what I understand there's a subtle difference between "by app" and "automatic". "By App" means, that f. ex. every one of your WhatsApp message notification will go under one WhatsApp notification pile, while "Automatic" means that iOS can potentially differentiate messages from certain people, group chats etc. and make different notification piles for each of those, although technically they're all still WhatsApp notifications.
At least that's what it seems to be doing on my phone.