The application-layer firewalls are also known as proxy firewalls or application gateways. They allow the greatest level of control and work across all seven layers of OSI. The filtering effect takes place at layers 3, 4, 5, and 7.

Many application-layer firewalls include some specialized application software and proxy servers. Specific traffic, such as FTP or HTTP, is managed by the proxy server. These servers are specific to their original design for the protocols. They help in report generation for auditing purposes by providing enhanced access control and validating every piece of data:

Proxy firewalls serve as an intermediary between networks, such as the internet and the company's internal network. In a proxy firewall environment, there isn't any direct connection. The proxy servers provide the only visible IP address on the internet. The client connects to the proxy server to submit their request pertaining to Layer 7, which includes destination as well as data. Based on the configuration on the proxy server, it can analyze, filter, or change the data itself before processing. It can make a copy of all the incoming packets and change the source address, in order to hide the internal address from the outside internet world, before it is sent out to the destination. And when it receives a response from the destination, it becomes its responsibility to ensure the delivery of that response to the right client.

The following are some benefits of application-layer firewalls.