The way it works is if you are the highest bidder and another bidder outbids you in the last 15 minutes the auction will continue for another 15 minutes giving the original high bidder (you) time to decide if YOU want to bid again. The new bidder is irrelevant (at this time) because they have the high bid. They can raise their reserve, but it doesn't add time to the auction. If you bid again, then the clock will reset for 15 minutes (in some auctions. In other sites, it will not rest and only you and the sniper are allowed to bid, because the auction technically ended...gets confusing until you see it happenn once)

Yes the auction could go on forever but only if two different people are continuing to increase the bids. Very much like a real auction, not a proxy. The item stays on the block until no one bids anymore.

the most important thing is that it's only an increase in the actual sale price that continues the auction not an increase in the winners reserve.