Proxy Server

Hi, I am having problems understanding how a proxy server works.

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If I host the Master Server and Proxy Server on machine A,

and B hosts a server using the proxy server from A,

and client C joins B,

does all network data get routed from B to A to C, and vice versa?

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If B hosts a server using the proxy server from A,

does that mean that everyone can join his server, regardless of private IP, NAT, etc?

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If I host the proxy server, is it limited to only 1 server using it,

or multiple servers can use it at the same time?

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Hope that you guys can help me, thanks!! :D