Anypoint Studio has a feature to automatically generate documentation for Mule projects. The documentation plugin allows users to generate an HTML-based documentation with a single click. It documents each flow, element, and attribute in the project. Developers can add descriptions to components using the doc:name attribute, and these will appear in the generated documentation. The documentation is saved as an index.html file in a selected folder, displaying both graphical and XML representations of the project's flows and configurations.