They way you transcribed this proof it has problems.
First of all it is not a proof of: $x < y+ \epsilon$ for all $\epsilon > 0$ if and only if $x \le y$.
It is a proof only of: If $x < y+\epsilon$ for all $\epsilon > 0$ then $x \le y$.
Proof only goes in one direction. You will need to do another proof for: If $x \le y$ then $x < y+\epsilon$ for all $\epsilon > 0$.
Now to the proof:
Suppose to the contrary
This means suppose $x< y + \epsilon$ for all $\epsilon > 0 \not \implies x\le y$.
This means suppose there are an $x$ and $y$ so that $x < y+\epsilon$ for all $\epsilon > 0$--
(In the proof as you wrote it you left at that this needs to be true for all $\epsilon$ each and every one, not just one in particular.)
But somehow for this $x$ and $y$, it happens that $x \not \le y$. That would mean that $x > y$ even though $x < y + \epsilon$ for all possible $\epsilon > 0$.
Since $x > y$ that mean $x-y > 0$. Let's give $x-y$ a name. I'll call it $BIPPYBOO$.
So $BIPPYBOO = x-y > 0$.
The proof you quoted called it $\epsilon_0$. But I'm calling it $BIPPYBOO$.
Notice that y+ϵ=x
That was simply a typo. They meant $y + BIPPYBOO = x$.
Which is obvious. If $BIPPYBOO =x-y$ then $y + BIPPYBOO = x$.
This contradicts the hypothesis ϵ=ϵ0.
This left out a very important word.
This contradicts the hypothesis (that $x < y + \epsilon$ for all $\epsilon > 0$) if we let $\epsilon = BIPPYBOO$.
Our hypothesis is that $x < y + \epsilon$ for any $\epsilon > 0$. But $BIPPYBOO > 0$. So this should be true if we set $epsilon = BIPPYBOO = x-y$. We should have $x < y + BIPPYBOO$.
In other words we should have $x < y + (x-y)$ because $x-y > 0$ and for ANY $\epsilon > 0$ we have $x < y + \epsilon$.
But obvious $x < y+(x-y) = x$ is not true.
So our assumption, $x < y+\epsilon$ for all $\epsilon > 0$ means that $x > y$ is impossible (because that would mean $x < x +(y-x) = x$ which is just plain nutty).
So our assumption, $x < y+\epsilon$ for all $\epsilon > 0$ implies $x \le y$.
That's what the proof says.
And that's half the proof.
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Now we have to prove if $x \le y$ then for any $\epsilon > 0$ we will always have $x < y+\epsilon$.
......
Which is easy.
If $\epsilon > 0$ then $y < y + \epsilon$. But $x \le y$ and $y < y + \epsilon$ so by transitivity $x \le y + \epsilon$ and that is true for any $\epsilon > 0$.
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So if $x < y$ for any $\epsilon > 0$ then we know $x \le y$.
And if $x \le y$ the we know that $x < y+ \epsilon$ for any $\epsilon > 0$.
So that proves our theorem.