How exactly does a proxy work?
If I want to connect to say, IP 100.100.100.100, Port 80, my computer will send a tcp packet with this adress into the wire.
Now If I use a proxy server say, 200.200.200.200 Port 8080 (such kind of proxy that you can set up in internet explorer) how is this process changed?
When I still want to connect to the same IP, will the IP header will include the destination IP or the proxy IP or both?
I already googled, there are hundreds of pages that tell you how to set up a proxy but none explains how it works under the hood.
The HTTP request is sent from Client to port 8080 of the Proxy Server. The Proxy Server then originates a new HTTP request to the destination site. The proxy, depending on the configuration, will often add a "X-Forwarded-For" header to the HTTP request. The log files on the destination web site will show the proxy's IP address, but may or may not be configured to log the "X-Forwarded-For" address.
That's the typical configuration, but proxy software will allow you all kinds of customization.
EDIT: I should note that when I originally read your question, I got the idea you were asking about an HTTP Proxy specifically, such as squid or nginx. There are many different types of proxies available. In Internet Explorer, you'll most likely be using an HTTP proxy, but there are many other types as well.
HTTP is a Layer 7 protocol so dont get confuse. when you use a HTTP proxy and you type say google.com , the HTTP header still same google.com, but the destination IP address will be IP address of the Proxy, source will be Hosts IP to the customized port number 8080.
To use an HTTP proxy, the request is sent from the client to the proxy server's IP address rather than to the destination server. The proxy must then read the HTTP header to extract the request-URI. The request-URI includes the name or IP of the destination server, and the proxy server uses that information to forward the request.
The HTTP specification allows the request line to exclude the server name and port when a proxy is not used (since these would be unnecessary if the request was sent directly to that server). But, as per the spec...
The absoluteURI form is REQUIRED when the request is being made to a proxy.
So when not using a proxy, the request line might look like:
GET /robots.txt HTTP/1.1
but to use a proxy, the line must include the server name (and port if not 80):
GET http://httpbin.org:80/robots.txt HTTP/1.1
The response side if the operation can be simpler since the proxy server may simply relay the verbatim response via the pre-established request socket.