This article is from the eBay FAQ, by William B. Shaw firstname.lastname@example.org with numerous contributions by others.
You have just been introduced to the proxy bidding system. When you place
your bid, eBay only shows the minimum amount necessary for you to win the
auction. If other bidders jump in, your bid will automatically increase
until the other party quits bidding or your maximum bid (the amount you
entered) is exceeded. This method is very effective as long as you bid the
maximum amount you are willing to pay. If you are only incrementally
bidding, you are drawing attention to the auction and potential snipers can
easily take the auction from you at the last moment.