No, the geofence-based automatic control of camera surveillance does not apply to your SMS alarm, as the app cannot send SMS messages in the background. However, enabling Auto-ON is a good idea even though you have an SMS alarm as described below.
Alarmhandler does not receive or access the received SMS from your alarm, but it is able to detect if the SMS alarm goes off via sound detection. The sirens will be picked up by the IP camera microphone that will trigger camera uploads to our servers. This in turn will show up as an alarm in Alarmhandler. Of course, this requires that the IP camera surveillance has been enabled. If you sometimes use the SMS alarm control panel to enable the SMS alarm, your IP cameras might not be enabled. Therefore we suggest you turn on the geofence based Auto ON/OFF function for camera surveillance.