We can say in simple words that AFC will lock the receiver to any valid RF signal. Below, we can see a basic block diagram of an receiver. The VCO is mixed with the RF signal which enter the mixer (yellow). The VCO can be a coil and a tunable capacitor. To bring out the sound from the FM signal, the product from the mixer is filtered and enter the demodulator (blue).
Now you feel the different in tuning with or without AFC. You have to ve very steady on your hand without AFC and if you touch any component the frequency will change. When you are trying to find narrow band signals, this is specially annoying. Just let the tunable capacitor slide and my receiver locked to all kinds of signals when the AFC is connected. The receiver could even locked the police frequency which is narrow band FM signal (5kHz). [Circuit’s schematic diagram source: AFC]