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Proxy server is a server that acts as an intermediary for requests from
clients seeking resources from other servers.
Some families have single internet connection but many computers. They can share Internet connection for other computers on the LAN with a proxy server.
All request from clients will go to proxy server, than proxy will cache it in local disk and than client will get feedback. It will be more quickly than direct accessing.
To hide the IP address of the client computer so that it can surf
anonymous, this is mostly for security reasons
A private proxy server is a dedicated IP that is being exclusively used by only one
client at a time, mainly to hide his public IP address assigned by the ISP.