The auction determines the composition of the validator set for each era of the protocol. It is a "first-price" auction (where winning bids become stakes) with a fixed number of spots chosen to balance security with performance. Because rewards are proportional to the stake, it is expected that this competitive mechanism will provide a powerful impetus for staking as many tokens as possible.
The auction contract acts as a front-end user interface to the auction by directly accepting bids from validators and delegators. It also contains the logic necessary for carrying out the auction.
The number of full eras that pass between the booking block and the era whose validator set it defines. The auction delay is configurable and can be several eras long.