How exactly does a maximum bid work on eBay?

First off, I really apologize, since I don't think that this question really warrants its own threat, but I needed to know, and the eBay FAQ really didn't elaborate.

When you enter a maximum bid amount on an eBay auction, will that instantly jump the current bid up to that amount like a regular bid? Or is it more like an automatic safeguard, where each time another person places a bid, the system will automatically bid for you again to keep you on top as long as it stays below the max amount you set? Is there also a way to raise your maximum bid in the event that the price goes over the one you set?

Thanks!

WildCowboy said:

It's a ceiling...the eBay system will continually bid for you in minimum increments just high enough to keep you as the top bidder, up to the maximum bid amount you have set.

http://pages.ebay.com/help/buy/proxy-bidding.html

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So let's assume that the item in question had a few more minutes to go. I place my maximum amount at $1200. Someone bids $900 just before the auction ends, but the system outbids him for me with a minimum at $910. I win.

Does this mean that I pay $910 to the seller, or do I have to pay my maximum bid if I win?

And after I place a maximum bid, can I revise it or place a new one if mine is outbid?

Thanks!

Thanks everybody. :]

MovieCutter said:

Just be careful not to put in something outrageous like $20,000 so you ensure yourself a win, because if some other bozo bids $20,000, guess what. But those kind of bids are never taken seriously anyway, and you can usually cancel the bid immediately after you make it.

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How do you cancel a bid? Is there a button?