DansGuardian is an open source content filtering proxy server that can block offensive, malicious, or time-wasting content. It works by pairing with proxy servers like Squid or TinyProxy to filter web traffic. DansGuardian can be configured to log blocked content, apply user-based or group-based filters, and uses blacklist and whitelist files to determine what content to allow or block. Basic configuration of DansGuardian involves editing configuration files to specify the proxy port and blacklist files, while more advanced options allow regular expression matching and separate filter profiles for different user groups.