Example:
Items bidding starts at $5. Someone proxy bids $45. It shows that they're at $5 because that's the highest they need to win the auction currently. You come in and bid $10. It now shows that they've bid $11 as it's still less than $45, but enough to keep winning. You add another $10, now it shows they're at $22. Once you bid $46, then it will show you as the winner of the "bid war", but not necessarily the auction.

Basically, this person has put up how much they're willing to pay for the item right up front. This will allow them to more freedom of time. They don't have to come back to the auction every 10 minutes to check if someone's beat them.

Hope this helps.

Fac