Q: How do tax deeds work as far as investing in real estate through tax deed auctions?

The actual procedure can vary from state to state. Essentially when someone doesn't pay property taxes on their property (usually residential but could be commercial too) someone else pays the tax to the taxing entity and then either owns the property or has a Right of Redemption on the property whereby they could own it  if not repaid by the property owner. In this instance the property owner could repay the person (within a specific time period) who paid the taxes with fees and interest added on to the tax amount. It can be a risky proposition and you need a lot of liquid cash that you won't need for an emergency.

Source: [Quora.com]

Q: Is attending & bidding on property at tax deed sale/auction (at the courthouse steps) the easiest way to get a deed and own the property?

Check with the authorities (usually the Assesor's Office) in the county you're interested in. The first thing to find out is whether they auction off Tax Liens or Tax Deeds properties. If they auction tax liens, you may never get the property that secures the lien. Properties can be redeemed before they can be foreclosed on (and in some cases might be redeemed after that).

Assuming that the county has foreclosed on a property, then auctions it off, you may win the bid and get ownership once you pay the costs involved. Please note, that you will get the property as-is, thus, make it a point to do your due diligence (inspection, chain of title, roof leaks, etc.) – this will ensure that you know exactly what you're getting, and that there will be no (financial) surprises.

That said, purchasing (or investing in) tax deeds can be financially rewarding, once you learn the basic ins & outs of the whole process.

Source: [Quora.com]

If you buy a property deed through the unpaid taxes auction, do you instantly own it or have to give people time to pay it back?

The states establish the laws that cover this so check what happens in the jurisdiction you're concerned with. What you want to find out is whether the previous property owners have any recourse to redeem the property after the property has been auctioned off. At least one state allows several months after the auction sale before the previous owners are no longer allowed to redeem the property. Most states either foreclose after giving the previous owners several years to redeem the property tax liens, or they auction off the tax liens (and if the lien buyer gets into the appropriate position with the tax liens, they can foreclose on the property). In either of these situations, by the time the property is foreclosed the time limit for redemption has already expired, and the owners have no more recourse.

When state law allows for redeeming after sale, the buyer needs to wait out the redemption period before enhancing or refurbishing the property. If the refurbished property is redeemed before the recourse period expires, the refurbisher cannot recover any of the costs of refurbishing from the property owner. The refurbishing is considered a “gift” to the owner. Once the recourse period has expired, the new owner can do what they want with the property, and the previous owner has no more claim(s) on the property.

Source: [Quora.com]

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