It's not an auction site, the price is set by whoever buys tickets (from the original venue/ agent) for an event with the intention of selling them for however much they think they will get for them.
It's pretty cool, b/c it's all about supply and demand. I've used them on a few occasions for concerts and for a couple of sporting events (both as a buyer and a seller). Everything was exactly as advertised. It's a good feeling when you get tickets for a reasonable price and then check back a few days or a week later to see that demand has pushed the price up dramatically!
The seller lists tickets for sale, and when someone orders them, the seller must mail them to StubHub, who take a % from them as commission. Stub Hub then holds the tickets until you pay, by credit card or check, and they then fedex them to you.
I much prefer using StubHub to Ticketmaster. I loathe Ticketmaster!
http://www.stubhub.com/