Here is the example taken from Ross' Elementary Analysis ((*) refers to the $\epsilon$-$\delta$ definition of continuity):

Usually it is possible to know what to value to bound $|x-x_0|$ by (usually a natural number). Where is the intuition to let $|x-x_0|$ be bounded by $\frac{x_0}{2}$? Furthermore in the line that starts with "If $|x-x_0|$...", I'm not sure how $|x-x_0|<\frac{x_0}{2}$ leads to the remainder of the sentence aside from $|x|<|x_0|+\frac{x_0}{2}=|x|<\frac{3x_0}{2}$. Any explanations are appreciated.