In the early to mid 80s "layer 3 switching" was becoming a thing and each switch vendor had their own method for implementation. Cabletron was a large switch vendor then and their method of layer 3 switching depended upon ARP. Each host would be assigned a /32 ip address and their default gateway would be their own ip address. There was a registry setting available on Windows NT server that would cause the DHCP server to provide hosts with DHCP address and router assignments that met these requirements.
Ports that had routers connected to them were designated as router ports and needed to have proxy arp enabled.
Whenever a host wanted to talk to any IP address which was not already in it's arp cache it would send an arp request. The management system of the switch, which in this case was software running on a server outside the switch, would look up in it's tables if it knew the IP address from another switch port. If so and all policies allowed the host sending the request to speak to the port the destination was associated with the manager would respond to the arp request with the mac of the destination. If the requested IP address didn't exist in it's tables the request would be flooded out all router ports.
Ports that had routers connected to them were designated as router ports and needed to have proxy arp enabled.
Whenever a host wanted to talk to any IP address which was not already in it's arp cache it would send an arp request. The management system of the switch, which in this case was software running on a server outside the switch, would look up in it's tables if it knew the IP address from another switch port. If so and all policies allowed the host sending the request to speak to the port the destination was associated with the manager would respond to the arp request with the mac of the destination. If the requested IP address didn't exist in it's tables the request would be flooded out all router ports.