A SOCKS based server operates at the Session layer of the OSI model.

SOCKS is an Internet protocol that allows client-server applications to transparently use the services of a network firewall. SOCKS is an abbreviation for "SOCKetS". As of Version 5 of SOCK, both UDP and TCP is supported.

One of the best known circuit-level proxies is SOCKS proxy server. The basic purpose of the protocol is to enable hosts on one side of a SOCKS server to gain access to hosts on the other side of a SOCKS Server, without requiring direct “IP-reachability”

The protocol was originally developed by David Koblas, a system administrator of MIPS Computer Systems. After MIPS was taken over by Silicon Graphics in 1992, Koblas presented a paper on SOCKS at that year's Usenix Security Symposium and SOCKS became publicly available. The protocol was extended to version 4 by Ying-Da Lee of NEC.

SOCKS includes two components, the SOCKS server and the SOCKS client.

The SOCKS protocol performs four functions:

Making connection requests

Setting up proxy circuits

Relaying application data

Performing user authentication (optional)

Source:

KRUTZ, Ronald L. & VINES, Russel D., The CISSP Prep Guide: Mastering the Ten Domains of Computer Security, John Wiley & Sons, 2001, Chapter 3: Telecommunications and Network Security (page 96).

and

http://en.wikipedia.org/wiki/SOCKS

and

http://www.faqs.org/rfcs/rfc1928.html

and

The ISC2 OIG on page 619