A Proxy Bid is a bid automatically placed by the auction system on your behalf based on the Maximum Bid Amount that you set for the particular listing. This is a convenient way to automatically bid on your items without having to continually return to your computer to check on your auctions. With Proxy Bidding, you place a bid by entering your maximum bid amount (which is the most you're willing to pay for an item). If another bidder places a bid on your item, your Proxy bidding will then bid automatically on your behalf at the lowest possible bid increments. Proxy bidding will not bid more than the maximum you specified.
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 email if another bidder has surpassed your maximum bid. In case of a tie for high bidder, earlier bids will take precedence.
* Proxy bidding is only allowed with auctions and Reserve Price auctions in which the reserve has been met. You can view a tutorial on proxy bidding Here