Proxy Address Resolution Protocol (ARP) allows the system to respond to ARP requests for the IP address on the specified interface. Without an ARP response, external devices would be unable to communicate with the requested IP address.
Even though the system responds to ARP requests, it is transparent to the external device and the system using the proxied address. Because the system is transparent, the firewall and NAT features do not affect traffic to and from the proxied address. In addition to proxying individual addresses, a range of addresses can be proxied by specifying a network netmask rather than a host netmask.
If an address is proxied, the system using the address should have a firewall or it should be not be on the public network.