Driving around in Bali often feels like the local lunatic asylum has turned everyone loose and given them a motorbike as a going away gift. The deal with Bali is that people start riding motorbikes when they are kids and probably never have a proper lesson. An environment where no one knows the proper way to drive develops its own logic, call it chaos theory if you like, bit that's what we've got here.
Westerners often get scared of driving in Bali but it is really less scary than you might imagine if you take a few precautions. Remember locals will rarely look before turning, indicate, worry about who is next to them or behind them. They will usually pull out into traffic without warning, back out straight into traffic and make a turn from the wrong lane (make a left turn from the right lane).
Knowing this you can help yourself by watching out for people about to join the traffic flow, give yourself a time and space margin with other drivers, focus your attention on what is in front of you and use your horn often. A quick 'beep beep' is not taken as anything other than 'here I am' in Bali. Driving in rush hour makes the danger level double in my opinion and the Bypass after dark is a race track. Most of the people I have met who have had accidents were riding at night, going too fast and driving while drunk.
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