Hi I\'m really confused about some basics with absolute positioning.
You didn't really position these elements, you just declared what type of positioning you want to use. In this case, the auto value isn't really doing anything, because the #abs element is being placed right where it normally would anyways. If you removed the top: auto; segment outright, it would have no effect on the element.
"bar" is not overlapping "foo" because you haven't positioned it to do so. It is contained within the #containingBlock element, and is placed below the block element because "foo" takes up a discrete amount of space. You want to override that? Set the top or other corresponding position values. To reiterate what others have said, top:auto just positions the top of that element as high up as room permits (which is what the element would have done normally).
For future reference, the auto value is used for when a parent CSS property overrides the child element's styling. For example let's say you had more complicated code which had a rule to apply a margin to every div within #containingBlock. If you want to change that back to normal, you would include margin:auto; in your containingBlock CSS.