...I never used ebay before, so I bid a couple of times on another item to see what would happen but each time I bid, I got a screen saying I was outbid by $2.50 more than my bid. This happened three times. What in the world is happening?😕
eBay allows you to place a maximum bid, and then it autobids for you up to that maximum. For example, if I place a $100 bid on a camera currently going for $25, eBay will autobid $26 for me. If you come along and bid $27, eBay will instantly autobid $28 for me, and tell you that you've been outbid.
If no one else bids, I'll get the camera for $28. If you continue bidding, however, and eventually go higher than my $100 maximum, eBay will notify me that I've been outbid.
Most successful ebay bidders "snipe" the auction in the last few seconds. For example, if the auction is at $26, I'll bid my maximum $100 five or six seconds before the auction closes. If you bid $35, eBay's will autobid $36.00 for me, and I'll win the auction, because you won't have time to make another bid.
Watch a few eBay auctions for desirable camera equipment (or anything else) and you'll see the bids escalate dramatically in the last few seconds.
BTW, the minimum bid increment can vary from auction to auction. I think (but I'm not certain) that it's a combination of seller preference and price bracket. In your example, it appears to be $2.50 minimum increment, but I've seen increments from $.50 to $5.00.
It's important to decide your maximum bid in advance, so you don't get caught up in a bidding "fever".