how deos the fly by wire work?
In 3rd person the ship will rotate to match the rotation of the camera. You need to activate the autopilot functions hold rotation and auto brake otherwise the fbw(fly by wire) will not work properly. Ship only rotates while moving so if it is stationary it won't rotate to prevent collisions while in proximity to other stations/ships/wrecks. It is still a prototype and has some issues when the ship is almost pointing to where the camera is looking (stuck in spiral). Main difference is that in this mode the ship moves itself to match your desired orientation compared with other modes where you move the ship manually.
TL;DR the ship rotates to where you are looking.