This is the best info I've found on Automated Market Makers so far:

They seem to be an automated solution to The Coincidence of Wants Problem Utilizing some kind of smart contract which is explained in the Bancor whitepaper.

However, I have yet to truly wrap my mind around the concept.

It's discussed in this post by Hive account@cryptoctopus:
https://steemkr.com/smt/@cryptoctopus/smts-automatic-market-maker-powered-by-an-idea-similar-to-bancor

And it's being built here by Hive account@theoretical and friends:
https://github.com/steemit/steem/issues/1807

It seems to be some kind of automated scheme that uses a connector token, Perhaps STEEM in this instance, to automatically move market participants between two other tokens, Perhaps different SMT's in this instance, while adjusting the relative value of the SMT's in some proportional way relative to the transaction and letting more 'traditional' market bid / ask force pick up the slack, or inform price discovery, in addition to this automated mechanism. I'm not sure if I have this right though...

Maybe Hive account@theoretical could make one of his famously amazing explainer posts to explain it for the lay-person and the math wizards alike! :) In the meanwhile, I will try to think about it more when I've had a bit more sleep, and tea.