What does adaptive paint (camouflage) do?

It basically chooses the camouflage most suited for your environment. It's so you don't have to choose the right camouflage all the time when you switch maps.

There seem to be 8 groups of camouflage:

Miscellaneous  
One-Off Patterns that do not fit into any other categories.

Adaptive  
Colors determined by the current map on server.

Autumn  
Warm, saturated orange and brown hues.

Desert  
Muted sandy yellows and various grays.

Naval  
Predominantly blue.

Snow  
White and light grays with little to no color.

Urban  
Grays between slate and black.

Woodland  
Combination of browns and greens.

The color scheme used by the adaptive camouflage switches between the Desert, Naval and Woodland color schemes according to the map. There have been reports that not always the most appropriate scheme for a map is selected, like @turbo already mentioned. The Autumn, Snow and Urban color schemes are not included in the adaptive camouflage.

See this wikia entry for more details.