What is a proxy server ???
In computer networks, a proxy server is a server (a computer system or an application program) which services the requests of its clients by forwarding requests to other servers. A client connects to the proxy server, requesting some service, such as a file, connection, web page, or other resource, available from a different server. The proxy server provides the resource by connecting to the specified server and requesting the service on behalf of the client. A proxy server may optionally alter the client's request or the server's response, and sometimes it may serve the request without contacting the specified server. In this case, it would 'cache' the first request to the remote server, so it could save the information for later, and make everything as fast as possible.
A proxy server that passes all requests and replies unmodified is usually called a gateway or sometimes tunneling proxy.
A proxy server can be placed in the user's local computer or at specific key points between the user and the destination servers or the Internet.
What does your IP address reveal about you?
Your IP address reveals your point of entry to the Internet and can be used to trace your communications back to your ISP, your employer's network, your school, a public terminal. Though your IP address may not identify you personally, an IP is a unique identifier which represents your computer's digital ID while you are online.
It is possible to disguise your IP address on the Web by using an anonymous proxy server. A proxy acts as an intermediary, routing communications between your computer and the Internet. A proxy specializing in anonymous surfing, however, uses its own IP address in place of yours in every outgoing request.