What is this whole PNR auto-splitting thing about?
First, you need to realize there are two separate upgrade waitlists. There's the advance upgrade waitlist, which runs periodically from your applicable upgrade window until about four hours before departure, and the airport waitlist, which is manually cleared by the gate agents about 30 minutes before departure.

The first waitlist can handle an elite and a companion automatically. If you're next in line for an upgrade and there are at least two upgradeable seats available, you'll both get the upgrade.

The second waitlist (the airport one) can only handle upgrading one traveler on a PNR. If there is more than one person in your reservation when you check in, you'll be asked if you want to either split the reservation if waitlisted for CPU or stay on the same reservation and decline being on the gate waitlist. For supported waitlisted upgrades (GPU. RPU or Miles) you will not be asked and it will split (without choice) at check-in.

Next, you need to be familiar with United's "auto-check-in" feature. If you select this option when you check in for your original outbound flight (depending on how you check in, it may automatically default to selecting this), then shortly after 24 hours before your return flight segment, you'll automatically be checked in and boarding passes will be electronically delivered to you. discontinued

If you opt for this and the system automatically checks you in, and if you have two people in your reservation, the system will automatically split your reservation. You and your companion will now be on two separate reservations, and you'll be waitlisted for an upgrade and your companion won't.

Why might splitting be bad?
If your companions are not elite, they will no longer qualify for the elite benefits they inherited from you. That means no free baggage (including credit card companion bag benefit), no Economy Plus seating access (although they won't be booted out of E+ if they're already seated in it, barring irregular operations), no Premier Access, and potential issues in irregular operations as a result of being on a separate reservation (they may be rebooked on a separate flight from you without agent intervention). If you have TSA pre-check your family traveling with you on the same PNR can use the precheck line - which they cannot do if you split. And if you are traveling with children <18 and they are split into a different PNR they will become "unaccompanied minors" which means you cannot check them in electronically and will have to stand in line to check them in with an agent at the airport.

On the other hand, splitting allows you (the elite) to waitlist for an upgrade. Although your companion won't be listed on the return, you can still list him or her as your companion upon arrival at the airport, in which case they'll be upgraded after all other elites in your elite tier. If the smaller baggage allowance is not an issue, this may not be a bad deal: you can usually bring friends and family traveling with you through the Premier Access lanes at check-in, security, and boarding without question.

What is the recommended practice?

1. If possible buy one-way tickets so that an auto-split won't affect your return resevation.
2. If you have 3 or more persons flying in your group and want to upgrade everyone, consider splitting into 2 groups (i.e. 2+1, 2+2) and using RPUs to upgrade the group with the non-elite. You can then roll the dice on CPU for the elite+1, assuming you don't mind the risk of traveling in separate cabins.
3. Wait as long as possible to check in for your return flight. If you check in and opt to stay together, a "do not upgrade" flag will be entered into your reservation, and you'll no longer be listed on any upgrade waitlist (advance or airport).
4. When you finally do check in, make a decision: are you okay with the second traveler losing some elite benefits and having at least one of you sit in F, or do you need to remain on the same reservation? Decide whether to split accordingly.
5. If you split, talk to an airport agent upon arrival at the airport and have them add your companion to the upgrade waitlist.

Oops, I did the wrong thing. How do I recover?
If you split and didn't want to, it's too late. Think carefully before splitting. Split reservations cannot be re-integrated.

If you checked in early and didn't split, you can always call in and have your check-in canceled (as if you'd never checked in). At this time, ask to have the "do not upgrade" flag removed from your reservation. You can then either attempt check-in again and this time split (if you want) or do the recommended thing and wait until as late as possible before checking in.