WPAD certainly isn't new technology. In fact, it's been around for many years. However, it seems that many system administrators are unaware of its magic. Simply put, WPAD allows you to offer proxy information to users in your network without ever touching their computers. The feature is supported by most browsers, and in general, it "just works".

Although proxy information can be sent over DHCP, unfortunately, not all clients honor those settings. For maximum compatibility, it's best to have a local DNS record that points the domain "wpad" to a Web server. You put a configuration file named wpad.dat in the root level of that Web server, and clients get proxy information automatically, assuming they're configured to do so. (Most are by default; this is what your browser refers to as automatically detecting proxy settings.)

Here's a simple wpad.dat file:

function FindProxyForURL(url, host)
{
   if (isPlainHostName(host) ||
       dnsDomainIs(host, "my.local.network.domain.org") ||
       (host=="127.0.0.1") )
       return "DIRECT";
   else
       return "PROXY my.proxy.server.address:8080";
}

For more detailed information on how to configure your custom wpad.dat file, check out http://en.wikipedia.org/wiki/Proxy_auto-config.

And, for more information on the Web Proxy Autodiscovery Protocol itself, see http://en.wikipedia.org/wiki/Web_Proxy_Autodiscovery_Protocol.