What is a proxy server?

Proxy servers don't provide the sophisticated options of a firewall, but they can offer an effective barrier between your new network and many of the dangers lurking in the Internet world. You can block protocols from coming into the network, and you can increase control over your network by limiting protocols your users can access. Finally, proxy servers allow sharing of Internet connections between multiple users.

What is a NAT?

NAT (Network Address Translation) is the translation of an Internet Protocol address (IP address) used within one network to a different IP address known within another network. A NAT is a general form of IP Masquerading. NAT software assigns IP Addresses to internal users, and when they connect to the Internet, the NAT creates a temporary connection. The Internet doesn't care what type of internal numbering scheme you create for your users. The only IP Address that matters is the one seen from the outside. A NAT will increase the level of security by hiding the structure of the network. Also, it permits Internet account sharing.