In more detail
A forward proxy acts for clients, for example to filter content, cache pages or hide the client's address. A reverse proxy acts for servers: it receives requests, forwards them to back-end servers and can add caching, TLS termination and load balancing. HTTP proxies often add an X-Forwarded-For header with the original client address. For HTTPS, a client asks a forward proxy to open a tunnel with the CONNECT method, so the proxy sees the host name but not the content, unless an organisation deliberately intercepts TLS with its own certificate.
Why it matters
An application behind a reverse proxy should trust X-Forwarded-For only when it comes from its own proxy; otherwise any client can fake its address and dodge rate limits or IP bans. Check whether an address is a known proxy with the Proxy & VPN IP Checker.
Example
curl -x http://proxy.example.com:3128 https://example.com/
curl sends CONNECT example.com:443 to the proxy on port 3128 (Squid's default), which opens a tunnel; example.com sees the proxy's address, not yours.
Common confusion
A VPN encrypts and reroutes all of a device's traffic at the network level; a proxy usually handles one application or protocol and does not necessarily encrypt anything.