A capped nft-mint, a token launch, or a large liquidation opportunity creates hundreds of transactions competing for a handful of slots. Since ordering is bought with the priority-fee, the fee is the auction, and it can rise by orders of magnitude for a few blocks.
Losers pay too. Depending on the chain and the contract, a losing transaction may still consume gas as a failed-transaction, so an unsuccessful mint can cost hundreds of dollars for nothing. Bots with automated bidding beat manual users almost every time.
Gas wars also spill over. Everyone else trying to transact during the window pays inflated fees, which is why a routine swap can suddenly cost far more than usual and why traders unwinding leveraged positions during a crash face their worst fees precisely when they most need to move.
Related: priority-fee, nft-mint, failed-transaction, blockspace