To understand better, kindly go through the video lecture on Working with Proxy.
Proxies are low resolutions files that work in place of original files in your timeline. It helps to work with hight resolutions.
You need Same versions of Adobe Premiere Pro and Adobe Media Encoder installed in your system.
You can select all clips in project pannel and create proxies by right clicking on it. After the conversion by Adobe media encoder, you can simply relink and unlink the proxies with your original footage.