OK, I might be a little off because I don't use auto-tune usually. But recently, I used it to screw around with a theramin sample I downloaded. If I'm not mistaken, you use the Bypass to make sure it eliminates the notes you don't want your voice or instrument to go to. For example, let's say the melody you're singing has an "E" in it, but no "F", you bypass the "F" in case you sing the "E" a little sharp so that Auto-tune doesn't bring that note up to an "F".