Actually, a ship on Guard wakes when an enemy ship comes within sensor range.
A ship on sentry wakes when any ship comes within sensor range; but because we are in the beta in immediate/eternal war there is no difference at the moment. At the moment they don't function properly at all.
Personally i would like to see two additional modes, namely Interdict and Sally.
Interdict: wake when a enemy ship comes with (flight range - 1) / 2. This will allow you to attack and return to the original location.
Sally: wake when an enemy takes up position directly adjacent to your ship. This will allow you to attack without changing position.
These two would become very useful when the auto-attack comes along or if you could give these orders to ships in orbit or docked in a base. Auto-Interdict and Auto-Sally please.