It detects your weight on the steering wheel, i.e. torque sensor.
1. When it gives you a warning "Hold steering wheel" just try and put a little pressure with your hands, not enough to disengage autopilot, but enough to get rid of the warning.
2. Also, if you hold the steering very lightly (i.e. full contact, but not putting any weight), it still gives you the "Hold steering wheel" message.
Autopilot when used properly is BETTER and SAFER than no autopilot. But it is also too easy to not use it properly and not understand it's limitations. So, I feel there is a true danger of Autopilot giving a false sense of security, and the driver may rely on autopilot without understanding it's limitations. Sadly there are plenty of idiots abusing autopilot, and I fear that they will ruin it for all of us.
Personally speaking, unless it's a more or less straight freeway, I don't let go of the steering wheel. And when when I do, I always keep my eyes on the road. But given that I am not doing the mundane task of watching the lines ahead of me, I feel my brain has more free cycles so I have more situational awareness of the idiots around me, which keeps me safer.