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From an ISP's point of view, they use proxies to cache data. It helps the frequently downloaded data to be accessed quicker (since they can just give you the cached version on their proxy server) and save on bandwith.
From average person kind of view, people use it on LANs as a way of sharing internet over a network. Some people that are nervous being on the internet and see movies like the net and are afraid of the government seeing what they're doing, or having their credit card number or life stolen, or are doing illegal things use a remote proxy/proxys to hide their ip from the address they want to connect to. So like if I was to post on this forum thru a proxy, the forum would log the ip of the proxy I used, not my actual ip.
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