The best way to load balance multiple sock5 proxys on seperate VM’s in the same datacenter

Draw a picture of your request/response cycle for the application and isolate the bottleneck. You are correct that a single proxy distributing load to many application servers will require the aggregate bandwidth of all application servers. The classical solution is RR DNS. Google, Yahoo and Amazon all use this technique with a short TTL. I did some investigation a while back and documented my findings.

Another solution is to use a fancy-pants enterprise load balancing solution using virtual IP addressing to balance requests among multiple application servers with real IP addresses. I have worked with Netscaler and Stonesoft products. Both perform well but have terrible idiosyncrasies and are quite complex.

Your confusion is reasonable - they are often the same thing. But not always. When you refer to a load balancer you are referring to a very specific thing - a server or device that balances inbound requests across two or more web servers to spread the load. A reverse proxy, however, typically has any number of features:

1. load balancing: as discussed above

2. caching: it can cache content from the web server(s) behind it and thereby reduce the load on the web server(s) and return some static content back to the requester without having to get the data from the web server(s)

3. security: it can protect the web server(s) by preventing direct access from the internet; it might do this through simple means by just obfuscating the web server(s) or it may have some more active components that actually review inbound requests looking for malicious code

4. SSL acceleration: when SSL is used; it may serve as a termination point for those SSL sessions so that the workload of dealing with the encryption is offloaded from the web server(s)

I think this covers most of it but there are probably a few other features I've missed. Certainly it isn't uncommon to see a device or piece of software marketed as a load balancer/reverse proxy because the features are so commonly bundled together.