Proxy servers can be optimized through caching, load balancing, and monitoring performance metrics. Caching web content on the local network improves performance by reducing bandwidth usage and speeding up access. Load balancing techniques like proxy arrays, network load balancing, and round robin DNS distribute traffic across multiple proxy servers for high availability and optimized performance. Monitoring components like CPU usage, memory, disk usage, and network bandwidth helps identify bottlenecks and areas for improvement.