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Straight from Wikipedia, "In computer networking, a proxy server is a server application that acts as an intermediary between a client requesting a resource and the server providing that resource".
In other words, is a server application that stands between you and your target server: you can send a request to the target server through the proxy server, so the machine that sends the request to the target server is the proxy and not your client.
The target website has a sort of geo-fencing, so it shows data depending on the location of the IP address. This is a common case and choosing a proxy with an address belonging to the country we need the data from is quite a common case.