The offer would be sent to the person with the second highest bid, for whatever price that may have been.
You then have the option to accept the offer, which is basically a Buy It Now for the item.
I am unsure if it could then be sent to a third person, etc.
I believe most sellers do not want to take the time to wait on another buyer, having just had a poor experience with one. Or, by the time things are sorted with the first buyer and they are able to re list, they assume that the other persons have found the item elsewhere.
Does that make any sense? I should sleep.