AFAIK, and unless you have saved all the files involved in the preferences settings, there is no way to retrieve the previously existing one. Beside this, no, the preferences retrieving do not happen automatically and about why it occurs, well… Only a development team member could answer, I guess. More infos available here …
From my experience, I am absolutely against the idea that custom settings could lead to more instability. Otherwise, I would probably see Cubase crashing at least twice a day. Actually, it’s probably more something like twice a year…
So, each time I do, either a Cubase update or significative preferences/setup changes, I save all what is in the C:\Users<username\AppData\Roaming\Steinberg\Cubase [version]_64 folder (something like 60 Mb) in a safe place. It probably saved me several headaches related to the preferences management : I know I can experiment and be able to retrieve them all, if needed.