Look at the bid history:
http://offer.ebay.com/ws/eBayISAPI.dll?ViewBids&item=120096650633

Did I win by 1c? The next lowest bid was $161.66 and I won at $163.53. Would I have still won if I had bid $163.50 or $163.00?

You don’t need to win by an increment, but your bid has to be an increment higher then the price of the auction at the time your bid is placed. When your bid was placed, the auction price was $159.50 ($157.00 + $2.50 increment).

You would have won even if your bid had been $162. $162 was the required minimum bid (auction price of $159.50 + $2.50 increment), which as it turns out, was also higher then 815ben’s bid.

Then why did it go for my max bid 0f $163.53? This is confusing, thanks for your patience.