When dealing with HTTP traffic through proxy servers in Internet Explorer, the DNS resolution process exhibits some non-intuitive behaviors that every network-aware developer should understand. Here's the complete technical breakdown:

// Pseudo-code of IE's DNS resolution logic
function resolveAndRoute(url, proxyConfig) {
    const bypassList = proxyConfig.bypassRules;
    
    // Step 1: Perform DNS lookup regardless of proxy settings
    const destinationIP = performDnsLookup(url.hostname);
    
    // Step 2: Check proxy bypass rules after DNS resolution
    if (isInBypassList(url.hostname, destinationIP, bypassList)) {
        return directConnection(destinationIP);
    } else {
        return proxyConnection(proxyConfig.address);
    }
}

Contrary to what many developers assume, IE performs DNS lookups before consulting proxy bypass rules. This implementation detail has several implications:

• DNS queries may leak for domains that ultimately get proxied
• Bypass rules can use both hostnames and IP addresses
• The client's DNS cache affects proxy routing decisions

Consider this PowerShell snippet to test proxy behavior:

$proxyBypass = @("contoso.com","192.168.*","10.*")
$testUrls = @("http://contoso.com", "http://internal-server", "http://google.com")

foreach ($url in $testUrls) {
    $dnsResult = [System.Net.Dns]::GetHostAddresses($url)
    $willProxy = $proxyBypass -notcontains $url.Host -and 
                 $proxyBypass -notmatch $dnsResult.IPAddressToString
    
    Write-Host "$url - Will proxy: $willProxy (Resolved to $($dnsResult.IPAddressToString))"
}

Using Wireshark or Microsoft Message Analyzer, you'll observe this sequence:

1. DNS query for the target hostname (UDP port 53)
2. TCP SYN to proxy server (if not bypassed)
3. HTTP CONNECT request (for HTTPS targets)

When writing network-aware applications that must respect system proxy settings:

// C# example using WebProxy class
var proxy = WebRequest.DefaultWebProxy;
var bypass = proxy.IsBypassed(new Uri("http://internal-resource"));

if (bypass) {
    // Handle direct connection logic
    var client = new WebClient();
} else {
    // Configure proxy settings
    var client = new WebClient {
        Proxy = new WebProxy("corporate-proxy:8080")
    };
}

Always test with both FQDN and IP address formats in your bypass list to ensure consistent behavior across different network configurations.

// Pseudo-code of IE's internal handling
function handleHttpRequest(url) {
    // Step 1: Perform DNS regardless of proxy settings
    ipAddress = performDnsLookup(url.hostname);
    
    // Step 2: Check proxy exceptions list
    if (isInProxyBypassList(url.hostname)) {
        return sendDirect(ipAddress);
    } else {
        return sendViaProxy(ipAddress);
    }
}

nslookup example.com
netstat -ano | findstr ESTABLISHED

function FindProxyForURL(url, host) {
    // Bypass proxy for local addresses
    if (isPlainHostName(host) ||
        shExpMatch(host, "*.local")) {
        return "DIRECT";
    }
    
    // Route all others through proxy
    return "PROXY proxy.example.com:8080";
}