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So a proxy is literally a stand-in or replacement. Before computers, someone could be your proxy for a committee meeting. They stood in for you, and got your vote. In IT, you can have proxy servers that ‘replace’ the origin server, then forward calls to it, or proxy objects that stand in for some other object. IT pioneered, I think, proxy as a verb: to proxy, proxied, proxying, but the concept is the same.
The most common Vue-specific example is perhaps where the vue instance proxies, (stands in for, or exposes) the objects registered in it’s $data. It’s all explained here.
Does that answer the question?
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Proxying refers to having a intermediate web server running (express for instance) that can intercept the HTTP requests you make and forward them to another server. this allows you to get around cross origin resource sharing issues, especially in development mode.