What does Proxy-ARP in WLAN configuration do?

An AP normally bridges all broadcast and multicast packets from the wired network to the wireless side. These packets are meant to reach all associated clients so typically use the highest or lowest basic data rate, which is typically a low value, like 1Mbps, 2Mbps or 11Mbps on a 11bgn network. While this increases the odds of delivery of the packet, a lot of airtime is taken up by these slow-rate packets, and if the AP could avoid forwarding them, this airtime can be used to bridge other packets for clients.

An ARP request is a fairly common and frequent broadcast packet on an IP network. Since the cnPilot E access points track the IP address of clients that are associated with it, when it sees an ARP request for such a client, instead of forward the packet over the air, the AP can format an ARP response on behalf of the client and respond to the wired network. This feature is called Proxy-ARP.

Not only does this avoid the exchange of 2 extra packets on the air, one  of which is a slow-data-rate broadcast packet, this feature also improves the battery life of mobile wireless clients since they dont have to wake up from power-save and process this packet, the AP does it for them.