The Server User is the user account that the proxy uses. The user name you enter as the proxy server user should already exist as a normal user account. When the server starts, it runs as if it were started by this user.
If you want to avoid creating a new user account, you can choose an account used by another server running on the same host, or if you are running a UNIX proxy, you can choose the user nobody. However, on some systems the user nobody can own files but cannot run programs, which would make it unsuitable as the proxy user name.
On a UNIX system, all the processes that the proxy spawns are assigned to the server user account.