eBay uses a proxy bidding system. Each time you place a bid by entering your maximum bid amount (which is the most you're willing to pay for an item), you will be using eBay's proxy bidding system. The system will then bid automatically, on your behalf and at the lowest possible bid increments, until your maximum bid amount is reached. That's all there is to it!
The goal is to win an item at the lowest successful price. To do so, you must be the bidder who placed the highest maximum bid at auction close. You will be notified by e-mail if another bidder has surpassed your maximum bid. In case of a tie for high bidder, earlier bids will take precedence.