Known Limitations - MichaBrugger/obsidian-footnotes GitHub Wiki

Inserting new auto-numbered footnote in-between two existing footnotes will insert the next numeric index (e.g. 1, 3, 2).

It will NOT update the indices according to their natural order (e.g. 1, 2, 3).

Example sentence[^1] with two▊ footnotes[^2] already.
  
[^1]: Foo
[^2]: Bar

After insertion:

Example sentence[^1] with two[^3] footnotes[^2] already.
  
[^1]: Foo
[^2]: Bar
[^3]: Baz

If you're looking for this capability to "Automatically Re-Index Footnotes", check out the Linter plugin, which has the ability to re-index all your footnotes based on order of occurrence every time a note is changed or saved.