In real flight, one should make maximum use of cockpit automation because it minimises pilot workload and thus maximises safety. Most mistakes which pilots have made which resulted in accidents would not have been made under conditions of lower workload.
While I certainly agree that one should know, understand, and be capable of flying through automation, I strongly disagree that one must or should make use of it; particularly all the time.
Automation and supportive devices such as flight directors are tools to be used, but one should be equally comfortable with and without them. One need not use them all the time, either.
The truth is that while automation has certainly prevented problems, it's also been the cause of them, including some notable major fatal mishaps resulting from overreliance on automation.
The flight upset and subsequent severe damage and loss of control of a China Airlines B747SP over the pacific was the direct result of the pilots not being in the loop during autoflight. The American Airlines B757 crash near Cali, Colombia, was the result of overreliance on flight management and automation. Eastern Airlines Flight 401 crash in the Everglades was likewise an automated descent and related to autopilot mismanagement issues.
Automation can be a great thing, but it can also be a curse.