AS only knows if your bid is below the 'Current Price'. (that's not the same as the winners max)
Suppose you enter a snipe for $90... Bidder 1 places a bid for $100, and bidder 2 places a bid for $125.
The current winner will be bidder 2, with a current price of $101 (the amount it takes to win over bidder 1) We know bidder 2 has a bid of $101 or more. That's obviously over your $90, so AS knows your bid is to low. If you raised your snipe to $115, you would no longer get the bid to low message, but STILL would not win the auction, because it's not over bidder 2's unknown max of $125.