Okay . . . I'm no mathlete, but here is the explanation Brent just gave me and I think it will make sense to the mathletes in the crowd:
When a user places a bid, it will only go up to the next bid increment, unless someone else bids and then it will go up to the next increment unless it exceeds the users maximum bid.
Let's say an item is listed at $250. Bidder "A" places a bid for $270. The bid increment is $2.50 for this price range, so the bid for the item will only go up to $252.50. Now bidder "B" places a bid for $260. It is not enough to beat bidder "A"s maximum bid so bidder "B" receives the notice that you have just received, and the item price will go to $262.50.
This system is called proxy bidding and it lets bidders comfortably place their maximum bid and not have to keep watching the auction to see if they are outbid, while only paying the lowest amount possible.
You can view the bid increments table here: https://deals.axiomaudio.com/viewfaqs.php?cat=3#12 https://deals.axiomaudio.com/viewfaqs.php?cat=3#12
I hope this all makes sense and isn't too confusing!