This is also referred to as "setting up your Draft Auction" or "doing your auction". Once you've joined a league, you can now setup your "draft auction".
On the auction screen, you will see one drop-down box for every player on whom you must place a bid (even if the bid is $0).
Example: QB: [drop-down box 1] [drop-down box 2] [drop-down box 3] [drop-down box 4]
The 1st drop-down box represents your 1st-string quarterback; the 2nd drop-down box represents your 2nd-string quarterback; and so on.
When the league kicks off, the server will look at everyone's auction values and assign the best available player to the user who bid the highest for that position, and it will assign the second-best player in that position to the user who bid the second-highest, and so on.
Example:
User #1 bids $10,000,000 for his/her 1st-string quarterback.
User #2 bids $8,000,000 for his/her 1st-string quarterback.
User #3 bids $6,000,000 for his/her 1st-string quarterback.
And all the other users bid $2,000,000 for their 1st-string quarterbacks.
When the league kicks off, User #1 will get the highest-rated QB, User #2 will get the second-highest-rated QB, User #3 will get the third-highest-rated QB, and the rest of the players will be randomly assigned to the rest of the users who all bid the same amount.
As previously stated, you may submit and re-submit your draft auction as many times as you want before the league kicks off.