What’s the deal with bidding?

Haven’t seen this talk about much but I’m curious how this works.

I have been randomly placing bids with no strategy and get the feeling I’m doing it wrong.

I’ve noticed that some traffic sources such as propeller ads give you a recommended bid or a chart that displays the average bid, the highest bid and your current place in the bids for your traffic (popads). For example popads will say something like average bid for your traffic is 0.001, highest bid 0.026 and my bidding queue 18.

Obvio ...