The X-Forwarded-For (XFF)  header is a de facto standard for identifying the originating IP address of a client connecting to a web server through an  proxy. This is a non-RFC-standard request header which was introduced by the Squid caching proxy server's developers.
In this context, the caching servers are most often those of large ISPs who either encourage or force their users to use proxy servers for access to the World Wide Web, something which is often done to reduce external bandwidth through caching. In some cases, these proxy servers are transparent proxies, and the user may be unaware that they are using them.
Without the use of XFF or another similar technique, any connection through the proxy would reveal only the originating IP address of the proxy server, effectively turning the proxy server into an anonymizing service, thus making the detection and prevention of abusive accesses significantly harder than if the originating IP address was available. The usefulness of XFF depends on the proxy server truthfully reporting the original host's IP address; for this reason, effective use of XFF requires knowledge of which proxies are trustworthy, for instance by looking them up in a whitelist of servers whose maintainers can be trusted.
X-Forwarded-For: client1, proxy1, proxy2
where the value is a comma+space separated list of IP addresses, the left-most being the farthest downstream client, and each successive proxy that passed the request adding the IP address where it received the request from. In this example, the request passed proxy1, proxy2 and proxy3 (proxy3 appears as remote address of the request).
Since it is easy to forge a X-Forwarded-For header the given information should be used with care. The last IP address is always the IP address that connects to the last proxy, which means it is the most reliable source of information. X-Forwarded-For data can be used in a forward or reverse proxy scenario.
In a forward proxy scenario you can track the real client IP on your network through an internal proxy chain and log that IP address on a gateway device. For security reasons, your gateway device should strip any X-Forwarded-For before sending the request to the Internet. You should be able to trust X-Forwarded-For information in this scenario as it is all generated within your network.
In a reverse proxy scenario you can track the real IP of a client on the Internet accessing your web server, even if your web server is not routable from the Internet - i.e. it is behind a layer 7 proxy device. You should NOT trust all X-Forwarded-For information in this scenario as you may have received bogus information from the Internet. As such a trust list should be used to make sure that proxy IP's in the X-Forwarded-For header are trusted by you.
Just logging the X-Forwarded-For header is not always enough as the last proxy IP in a chain is not contained within the X-Forwarded-For header, it is in the actual layer 4 IP connection. A web server should log BOTH the layer 4 source IP and the X-Forwarded-For header information for completeness.
X-Forwarded-For header logging is supported by many web servers including Apache and Microsoft IIS 6.0 & 7.0 with the addition of Winfrasoft X-Forwarded-For for IIS.