Cloud Manager Automation with DigitalOcean allows users to easily create new MongoDB deployments without requiring extensive configuration work. The process begins by determining the use case and requirements for the application, followed by creating three droplets using a supported operating system and enabling private networking. The automation agent is then installed on all three servers, along with setting up the data directory and starting the agent. Finally, a monitoring agent is installed to report back to Cloud Manager, allowing users to automate their MongoDB deployment process.