Let’s take a look and see how this works in practice:

Here’s an auction that’s currently running – the bidding’s reached £5.28 , and there’s just 1 minut and 17 seconds to go:

Let’s look and see what happens when you bid.
Each bid placed costs you £0.60.

See what’s happened?
First – you’re now the highest bidder – whoopee!! 
You can also see that the price has gone up by 3p the timer shows exactly how long let to the end of the auction. 
You’ll also have one less bid in your account.

If no one else bids in these 20 seconds, then wahey – you’ve won but in this case the user "KISS" placed the last bid and won!