Let's say you're playing in a scramble, and there is a closest-to-the-hole contest on No. 7. The golfer in the tournament whose tee ball lands closest to the hole on No. 7 wins a prize. But how do the players and tournament officials keep track of how close balls are landing to the hole? How does anyone know who the leader is throughout the day, and who the winner is at the end of the day?
That's where the proxy marker comes in. Sticking with our example, lets say that Player B in the first group that plays No. 7 is the closest to the hole in his group. He becomes the leader in the closest-to-the-pin competition. So he writes his name on the proxy marker, and sticks the marker in the ground where his ball came to rest on the green. That's now the spot to beat.
Other groups come through No. 7, and each a different golfer hits his ball inside the previous best, that golfer puts his name at the bottom of the list on the proxy marker and moves the marker to the new closest-to-the-pin location.
At the end of the tournament, the tourney organizers visit the hole, measure the final distance of the proxy marker to the hole, and see whose name appears last on that list. They then know the winning golfer, and how close to the hole his winning shot was.