How does a proxy server work for anonymous browsing?

I have seen that at many places like colleges and schools block sites like Facebook, Myspace.

In some cases people are able to use a proxy sites and proxy softwares(ultrasurf,gpass etc.) to bypass the filter and access the blocked content.

Yesterday I have tried ultrasurf to get an understanding of how a proxy works. With the proxy configured I checked my IP using website www.whatismyip.com and I find that it is showing a different IP address from what I see when no proxy is configured. It is showing my location as if I was in Canada, but I am from India.

So I have the following questions:

1. How do proxies work?
2. How does ultrasurf or any other proxy software is able to do this?
3. How can I setup my own proxy (it is only for learning purpose)?
4. Can I use Squid for this purpose?

If you know of any good tutorials, electronic boos, or references please suggest them.

From serverfault Peeyush

• 1. How do proxies work?

  http://en.wikipedia.org/wiki/Proxy_server

  1. How does ultrasurf or any other proxy software is able to do this?

  Their servers are located in different countries and your traffic goes through them.

  1. How can I setup my own proxy (it is only for learning purpose)?

  In Ubuntu: https://help.ubuntu.com/community/Squid

  In Windows: http://www.papercut.com/kb/Main/InstallingAndConfiguringSquidNTProxy

  1. Can I use Squid for this purpose?

  Yes

  : It is only as anonymous as the folks running the service are willing to protect the connection information/logging...

  Peeyush : @bindbn I have installed squid successfully but for anonymous browsing using it i still can't access banned sites.i have read http://serverfault.com/questions/70448/using-squid-to-anonymize-http-traffic but still i am not getting it.So please explain it a little more

  : Installing a local proxy does not "circumvent" any existing web browsing restrictions if the proxy is still going though the same controlled connection/path and your system is going through the proxy now. Where is your proxy located in relation to the infrastructure that is controlling/limiting access to certain sites and which port is it operating on?
  From bindbn

• Squid is a bit of a workhorse for personal use. Something like https://www.banu.com/tinyproxy should be easier. Even http://www.torproject.org/

  From Porch