"I know the above is oversimplified, but I hope it's reasonably correct.

(I'm pretty sure I should have talked about sending packets to MAC
addresses at times, but I don't know or remember enough to do that, and
I think (??) this oversimplified view is adequate for my purposes.)"

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For all intents and purposes, MAC addresses have no bearing on NAT or
PROXY.

You are reasonably close but the devil is in the details...

---

Now my question: 

Can somebody tell me what is different about a proxy server?  (In some
similar oversimplified but reasonably correct and adequate form)

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A NAT server repackages the "protected" outbound packets and sends them
out to the internet as if originating from the NAT host machine.

Proxy on the other hand does NOT requires packets to be "repackaged"
rather the HOST acts as an agent or "proxy" (hence the term) on your
behalf.

With a proxy server the addresses used on the protected net are almost
unimportant.

The client "logs in" (passive proxies and login-less proxies confuse
things a bit) to the proxy on your behalf and submits the request, etc.

With NAT the client software can safely assume that your client machine
is "on" the internet. As a result there need be no special PROXY code
included in the client. Client software believes the machine to be
directly connected to the net with the NAT host as the gateway.

With proxy the client software can effectively only contact the internet
via the proxy.

Seemingly a small difference, but in fact it's a huge difference.

-JMS


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