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Hoopmanx or Ponyscott or somebody can confirm this:

I believe the way it is structured is that there are automatic bids reserved for regular season champions who were eliminated in their conference postseason tournaments and probably not going to the NCAA tournament.

I think that would apply to the likes UTEP and the Big West's Long Beach State who was upset by UC-Santa Barbara.

I don't think it means they are hosting games but that they are assured of going.

you are correct. The teams are also seeded, but on occasion the seeding goes according to who has the biggest arena and can draw the most.

UAB will have an automatic NIT invite if they are passed over for the NCAA