So does that mean the update will never be installed?
Yes, it can't auto-update while the computer is turned off.
How to make it happen?
Just set it to auto-update at an hour in which your computer is always on. If you are doing this because you don't want to update while you are using your computer, then set it to the time when you usually eat dinner or something, and leave the computer on while you do it.
An alternative, as mentioned by David on the comments, is to set your computer to auto-turn on in the BIOS. Note that not all BIOS support that. To do so:
Enter your BIOS by pressing del or whatever other key is indicated on boot-up - when the computer is turning on.
Resume on RTC Alarm or
Power on By RTC Alarm or
Resume by Alarm and enable it.
Set the time to 4:55PM or something close to when you want it to update. Save and quit.
That's it, your computer will automatically turn on 5min before the auto-update and then Windows will update. You can also make a
.bat so it will automatically turn off after a few hours or even after the update is finished (by looking for the process using
tasklist | find).