Quote

Proxy bidding occurs when bidders have the option to set a maximum price that they would be willing to pay for an item and then allow the computer system to bid for them by the bid increment until someone places a higher bid than their maximum.

The bid increment is pre-set by the auction and is the amount that a proxy bid must increase by. The computer will place a new bid following the bid increment every time someone else places a higher bid than you and will continue to do that until the auction is over and you win, or the price goes over your set maximum. Bidders are typically notified if their maximum has been outbid and have the option to set a new maximum to continue participating in the auction.

This made me very confused.  Would have been much better if there is a checkbox with (Auto bid)  with question mark. And mouse over the question mark show the above text as you mentioned above.

[] Auto bid ? 

It is called proxy bidding, not auto bid.
There is setting for admin to enable/disable it as well for auctioneer to enable proxy bidding or disable it and run standard auction instead.