I started to get confused when eBay first began the "max bid" feature. Before that, you had to play "eBay sniper" to make a bid at the last second to keep from being over-bid.
With the max bid feature, it seemed like the amounts the system bids on your behalf are random. I've seen where my bids kept increasing as others bid, but my increments were higher than the minimums. Seemed like a sneaky way for sellers to get more than they would had you just manually bid the minimum close to the end.
Also, max bids run from whenever you put in your bid. That gives plenty of time for others to force your bids up as well as time for them to exceed your max.
In short, I think the max bid thing sucks. If someone puts a really high max in at the last second, they'll win unless another max bid is higher. If there are two high max bids set, the system increments both back and forth until both are maxed out. The higher max should win. Seems like a ruse to help the seller (and eBay) take more of your money, because a normal auction will just end, and the highest bid at that time wins. Any incremental bidding to remain the high bidder would require buyers to manually outbid the latest high bid. If the auction ends before you get your bid in, the other guy wins, but the price wasn't run up by the system. The buyer probably got it for less than his max would have been.
I do like the Buy-It-Now ads. But for auctions, what's to stop a seller from using another account to post bids just to max out people's max bids? If I bid $100 on something that's sitting at $50, the seller could put in a few new bids until my max stops being the highest bid. Then he knows I'm maxed out at around $100. If he then removes the bogus bids, my $50+ bid becomes the highest one so far. Near the end, he can bid $90 to force the max bid system to again jump mine up, but without his bid exceeding mine. I still win, but he's gotten more of my money using a bogus account to force me to pay more.
Sounds like this might be what you're experiencing. I've seen my bids miraculously increased to my max, yet still won the auction. I'd expect to see some of the other bidders win by exceeding my max, but seems like that's not as common as I expected.
This sounds like it might have happened to you.
Yes, sellers can cancel bids on open items. Bidders can also retract bids they made under certain circumstances.
eBay posts instructions for sellers and buyers on how to retract or cancel bids.
https://www.ebay.com/help/selling/listings/selling-auctions/cancelling-bid?id=4140https://www.ebay.com/help/buying/bidding/retracting-bid?id=4013