Proxy ARP Between Subnets
In some networks, it is desirable to configure the IP host with a wider subnet than the actual subnet mask of the segment. You can use proxy ARP so that the router answers ARP requests for devices outside of the subnet. As a result, the host communicates as if all devices are local. In reality, communication with devices outside of the subnet are proxied by the router.
For example, an IP host is configured with a class B address of 100.101.102.103 and a mask of 255.255.0.0. The switch is configured with the IP address 100.101.102.1 and a mask of 255.255.255.0. The switch is also configured with a proxy ARP entry of IP address 100.101.0.0 and mask 255.255.0.0, without the always parameter.
When the IP host tries to communicate with the host at address 100.101.45.67, the IP host communicates as if the two hosts are on the same subnet, and sends out an IP ARP request. The switch answers on behalf of the device at address 100.101.45.67, using its own MAC address. All subsequent data packets from 100.101.102.103 are sent to the switch, and the switch routes the packets to 100.101.45.67.