What this means is that if you have a slow link between you and the server, you can use the proxy to filter out unnecessary data in order not to overload the slow link. And the proxy can only remedy this if it is run on a machine that is somewhere between the slow link and the server. And it is easy to do, since the filtering proxy can run on the same machine as the Quake client. You can set up cool systems with several monitors, each looking to different direction, so you can for example have a monitor left of you, where you can see left view etc. Number of observer.
Demo recording is initially off unless -d demoname is specified.
Most options can be changed online from the quake client. This is all quite self-explanatory except maybe for the interface part. The localif is also the address that the proxy sends to clients that broadcast the server info request. Commands are inputted using Quake's say command. After you have connected to the proxy, all of the Quake's standard commands are still processed by the Quake client.