There's 2 types of parry - manual and auto. You can manual parry attacks by tapping block just before the attack hits you - you'll glow gold and there's a 'tink' sound as it harmlessly passes through your body.

Once you manual parry enough of a certain attack move, I forget what they call it exactly, but you'll 'master' fighting it, and now that specific attack will be (sometimes? always?) auto-parried when it hits you.

Enabling auto-parry means once you've parried enough of these moves, you'll have a really easy time dealing with enemies using them. If you've mastered enough of these moves, the game gets really easy, so disabling auto-parry can make the game more enjoyable, if you prefer having to play skillfully.