When you have a file open in an application like Preview you will see the name of the file as the title of that document window. Sometimes you will also see an icon to the left of that title. That is the proxy icon. You can drag and drop that icon like you can the real file. So, for instance, if you are viewing an image in Preview, you can drag and drop that icon from the title bar onto a different app in the Dock to open it in that app.
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