Proxy ARP provides for the ability of a device on a given network to answer the ARP queries for a network address that is not on that network. The ARP Proxy, being aware of the traffic destination‘s location, provides its own MAC address in reply. Serving as an ARP Proxy for another host effectively directs LAN traffic to the Proxy. The “directed” traffic is then typically routed by the proxy to the intended destination via another interface.
Proxy ARP is enabled by default. Typically, proxy arp is only used to reply to requests for hosts that are reachable via a non-default route. Proxy ARP can be configured to respond to ARP requests for hosts that are only reachable via the default route. Proxy ARP can also be configured to respond to ARP requests that are received on the interface to which this command is applied, if the source IP address of the request is reachable on the local interface.