The source is here: https://github.com/emacs-mirror/emacs/blob/master/lisp/emacs-lisp/package.el#L2113.
It deletes all packages that is not in package-selected-packages nor a dependency.
(defun package-autoremove ()
"Remove packages that are no more needed.
Packages that are no more needed by other packages in
`package-selected-packages' and their dependencies
will be deleted."
;; If `package-selected-packages' is nil, it would make no sense to
;; try to populate it here, because then `package-autoremove' will
;; do absolutely nothing.
(when (or package-selected-packages
"`package-selected-packages' is empty! Really remove ALL packages? ")))
(let ((removable (package--removable-packages)))
(format "%s packages will be deleted:\n%s, proceed? "
(mapconcat #'symbol-name removable ", ")))
(mapc (lambda (p)
(package-delete (cadr (assq p package-alist)) t))
(message "Nothing to autoremove")))))
(defun package--removable-packages ()
"Return a list of names of packages no longer needed.
These are packages which are neither contained in
`package-selected-packages' nor a dependency of one that is."
(let ((needed (cl-loop for p in package-selected-packages
if (assq p package-alist)
;; `p' and its dependencies are needed.
append (cons p (package--get-deps p)))))
(cl-loop for p in (mapcar #'car package-alist)
unless (memq p needed)