Often but not always. Sometimes you’re just working with proxies directly, audio mixing and the like. VFX workflows, finishing will be online full res often.

But even so everybody is often making their own proxies all the time. There’s a lot of passing around of ProRes Proxy or another intermediate quality format and you still make even lighter proxies locally so NLEs and workstation apps will still benefit from this

Proxy files have issues when doing coloring, greenscreens, effects shots. The bit depth, chroma resolution, primaries/transfer/colorspace gets changed. Basically only really usable when editing. With this, you don't need proxy files at all.