It does work, even with long titles. However, this is display feature (appearance only) and is subject to change. It's not the same as button that creats a real text string of the form: [title](url)
which you can copy/paste anywhere without depending on the page to regenerate the appearance of the title.
Also, I'm not sure what happens to the title generation/appearance if the original post is deleted the displayed text reverts back to the bare url (per comments below, thanks folks!).
Testing https://space.meta.stackexchange.com/q/1128/12102
Testing https://space.meta.stackexchange.com/q/1112/12102
However it doesn't seem to work for questions from another site:
so here I've done it manually again. Here's how it looked before my edit (after I re-pasted the url just to make sure):