newsproxy is a proxying news server, meaning that it doesn't actually maintain any information locally - everything it gets is off of other news servers. This is useful for several reasons, the most obvious of which is to allow a user to read news off of more than one server at a time. As different servers contain different groups, this is important.
Other benefits:
Allows non-NNTPAUTH capable news readers to connect to NNTPAUTH enabled news servers.
Allows the same newsgroup to be read on two different news servers, allowing users to choose their filtering policies more carefully.
Allow for overview-only feeds to allow users to share their idea of what a given group should look like. (Not currently supported by any servers, but it'd be interesting)
Allows for fast access to "local" articles, even on remote and slow servers.
Offers a framework to add additional news services, such as a news cache.
Depends on newslib.