Hi v,
It's called proxy bidding. These links should help explain how it works:
http://members.cox.net/cruentidei/ebay/proxy.html
http://pages.ebay.com/help/buy/proxy-bidding.html
http://www.auctionsniper.com/faqebay.aspx#faq_13a_lbl
P.S. You’ll not catch me commenting about the last bid versus the biggest - NEVER.