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Proxy server is a server that sits between a client application, such as a Web browser, and a real server. It intercepts all requests to the real server to see if it can fulfill the requests itself. If not, it forwards the request to the real server. Its used to improve performance and filter the requests primarily. To enable it in Internet Explorer:

On the Tools menu in Internet Explorer, click Internet Options, click the Connections tab, and then click LAN Settings.
Under Proxy server, click to select the Use a proxy server for your LAN check box.
In the Address box, type the IP address of the proxy server.
In the Port box, type the port number that is used by the proxy server for client connections (by default, 8080).
You can click to select the Bypass proxy server for local addresses check box if you do not want the proxy server computer to be used when you connect to a computer on the local network (this may speed up performance).
Click OK to close the LAN Settings dialog box.
Click OK again to close the Internet Options dialog box.

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