What a proxy is
Velocity (and older BungeeCord-style proxies) accept the player connection, then forwards them to backend Paper/Fabric/Forge servers you run. Players usually connect to the proxy address only.
When you need one
Multiple game modes, separate survival/creative servers, or a lobby that routes players. A single Paper SMP does not need a proxy.
Moving pieces
You will run: the proxy process, one or more backend servers, and correct forwarding/online-mode settings so UUIDs stay consistent. Misconfigured online-mode between proxy and backends is a classic ban/UUID mess—read current Velocity docs before copying old Bungee tutorials blindly.
Ports & firewall
Expose the proxy port publicly. Backend ports can often stay private to the host network if only the proxy talks to them. Exact firewall layout depends on whether backends share one machine.
Resource note
The proxy is usually lighter than a busy survival backend, but each backend still needs RAM/CPU for its world. Size backends first; the proxy is not a substitute for adequate survival resources.
Test path
Bring up one lobby backend + proxy, join through the proxy, use a server transfer command/portal, then add modes. Do not launch a eight-server network on day one.
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