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It adds a new network interface which you are working with as if you are working with direct Internet connection. But the IP is different, and all traffic is encrypted.
No, you need existing (Cable, DSL, dial up, Satellite, etc) Internet connection to be able to use VPN service.
While both a Proxy and VPN service will re-route your Internet traffic and change your IP, they function slightly differently.
Think of a Proxy as a Web Filter. The proxy settings are applied to your Internet browser whether you're using MSIE, Chrome, Safari, Firefox, Etc. When browsing the Internet through a proxy server,
all benefits with that server are used(Security, Speed, and Geographic Location). The proxy will only secure traffic via the Internet browser using the proxy server settings.
Unlike a Proxy, a VPN service provider (Virtual Private Network) encrypts all of your traffic, replacing your ISP and routing ALL traffic through the VPN server, including all programs and applications.
This will also use all benefits of the VPN server such as speed, geographic location, and security).
The VPN can be easily connected or disconnected with the click of a button.
In conclusion, a proxy server is completely browser-based, and is not as compatible with certain web pages that use non-browser technology. However, a VPN will work with ALL Internet-based services,
but will offer less choice on which applications will get run through your ISP, as with the VPN, everything is routed through that server when connected.
While the encryption does have some data overhead to it with typical use you won’t experience any slowness.
Some members do report that some applications, such as P2P apps, run faster as StrongVPN can bypass their ISP's throttles
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