A two-axis autopilot has capability to control pitch as well as roll, which means that it can be used to hold altitude not just heading. There are different ways this is implemented.
The big difference is in whether your autopilot has the altitude capture feature or not. If it does, you can tell your autopilot to "climb to such and such an altitude and then level off." There is usually a part of the autopilot console where you can set the target altitude. The autopilot knows to reduce its rate of climb or descent approaching that altitude. As the pilot, you need to ensure the correct power setting for the task; it's not an autothrottle and you don't want to be diving at high speeds, nor pitching up for a climb with decaying low speed.
If your autopilot does not have altitude capture, as this one doesn't, you have to wait until you're just about at the target altitude, considering the rate of climb or descent, and hit the ALT mode button at just the right moment. You may coast past and have to fix it afterwards, or you may have a habit like the one I'm trying to break, and just disengage the autopilot, level off manually, and then hit autopilot hold. I have this habit because the autopilot controls by motoring the trim, not by physically moving the yoke and hence elevator the way I do, and the effect of one airplane I fly trying to level the airplane with elevator trim is seriously sick-making. When the plane makes the pilot wonder if she can reach the vomit bags from her seat, it's worth hitting the red switch.
If you're flying level at one altitude and want to descend, there's two ways to do it. One is to leave the ALT mode engaged and to press on the vertical trim switch, not the electric elevator trim on the yoke, but a switch on the autopilot control box, and that will give a climb or descent of up to 600 fpm, while you are holding it. Or if you want a faster descent, you press the autopilot ALT button, disengaging that mode, descend like a normal person, and re-engage the ALT hold when you're at the altitude you want to hold. You can, of course, leave the heading mode on during the descent, so that the autopilot controls straight line flight and you control the climb or descent.
This engaging and disengaging makes for fun times, because to disengage the autopilot I am used to, you can press the big red autopilot disconnect button on the yoke, or just apply pressure to the yoke. As soon as there's a disagreement between what I'm telling the airplane and what the autopilot is telling it, that autopilot surrenders and gives control over to me. This particular autopilot, however, has much more confidence in itself. If I apply pressure to the yoke without disengaging the autopilot, it trims against me. And it will continue to trim against the force I exert until it runs out of trim, or I give up. At that point the control forces exerted by the trim may be more than the autopilot can handle, causing it to disengage, and leaving me having to exert fifty pounds of control force while retrimming. The fifty pounds figure is from the manual, not personal experience. I'm sure I didn't ever get much beyond twenty-five pounds before remembering to hit the disengage switch. From now on, I plan to use the disengage switch every time so I'm ready for either sort.
The way I fly without an autopilot, the descent rate depends on the power setting and the speed remains the same, unless I deliberately trim nose down to get a higher speed in the descent. During the training on one approach I didn't bring the power back enough because I'd started the descent on autopilot, and my speed was too high for my approach timing. I resolved to reduce the power before asking the autopilot to descend, just as I would if I were asking for the descent with the yoke, even though the training pilot did it the other way around.
It seems like quite a lot of bother to avoid having to fly the airplane, doesn't it?