When Windows Internet Properties -> Connections -> LAN Settings -> Automatic Configuration is set to "Automatically detect settings" how does Windows actually determine/discover what the settings are? Is it a network broadcast or some kind of targeted query to a server configured somewhere in the registry, or something else?
How does Windows actually detect LAN (proxy) settings when using Automatic Configuration
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Its simple: Browsers (Firefox works the same) query GET http://wpad/wpad.dat.
If a web server named wpad is resolveable, it should serve wpad.dat, a script file analog to netscape PAC files. MIME type must also be "application/x-ns-proxy-autoconfig".
This info about WPAD (Web Proxy Auto Discovery) seems to describe the process in detail, though I have confirmed that what Tomalak says is also actually occurring.
It's a network broadcast, usually using DHCP.
That there wikipedia page should tell you all you need to know.
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