I am not really sure how it did work but as I recall if you had a order and someone placed an item on the auction and it was at or below your order price the order would automatically place a bid.
Odd, I have offer items at 10% below offer and never get a hit. Some of them had a number of them wanted so I don't think they were hung on bids already made. However I will check it out by seeing how many items are on the AU the next time.