Proxy Bidding is a feature available for Online Items only and allows the system to manage a bidder's bid to ensure that they remain as the high bidder for as long as possible. This provides a bidding mechanism to keep the actual bid as low as possible yet provide a path to remain the winning bidder. With proxy bidding, if you are the highest bidder, then upon the auction's close, you become the winner. As the winner, with proxy bidding, you will only pay the lowest possible winning bid, which may not actually be the maximum amount you bid for an item.
Proxy Bidding is not available with multiple-winner items. A "maximum" bid placed on a multiple-winner item will be considered the actual bid being placed and treated as such.
Many people are familiar with proxy bidding from websites such as eBay which use it in their auctions. Also see Proxy Bidding Rules to learn more about its rules and limitations.
The Proxy Bidding defaults are set under Website > Online Bidding.
You can control whether Proxy Bidding is available and what is the default approach.