Know-How Exchange : E-Marketing

From a guide online I got this definition for Real Time Bidding:

"A system where publishers set the minimum CPM they will accept for an impression, and then advertisers bid on each individual impression as it comes up, by setting their own criteria and budget with the RTB platform."

So, if I have this right in this example I'm making up: I have a great website, I will accept being paid a minimum of 5 cents per time there’s an impression, and then people selling stuff will bid/compete on how much they’re willing to pay me to put their ads on my website. The ones that win go onto my website.

So far so good?

The next definition is Demand Side Platform:

"A Demand Side Platform (or DSP) is a type of RTB Ad Network in which Ad Agencies input how much they want to pay for an ad campaign, and then publishers come and bid to get the business."

Bit confused here. So, ad agencies say how much they want to pay for particular ad campaigns—for Joe Soap’s great Soap they will pay publishers X dollars per click or impression. In what way do publishers bid? Do they bid in terms of the least amount they're willing to accept?
So, I'm willing to accept 2 dollars per impression so I bid for that, but another publisher who has equally good traffic is willing to accept 1 dollar per impression so they bid for that, and the ad agency, using an ad server, goes with the 1 dollar bid?


If I could get some concrete examples of how RTB works in the context of DSPs, that would be great.