No one using proxy protocol with nginx-proxy and can tell how this works?

There are no default support for proxy protocol in nignx-proxy. But you can do this by updating nginx.tmpl file and then mount this to nginx-proxy container. Following things need to be changed on nginx.tmpl file

1. Change log format

log_format vhost '$host $remote_addr - $remote_user [$time_local] ' '"$request" $status $body_bytes_sent ' '"$http_referer" "$http_user_agent"';

to this

log_format vhost '$host $proxy_protocol_addr - $remote_user [$time_local] ' '"$request" $status $body_bytes_sent ' '"$http_referer" "$http_user_agent"';

2. Change proxy header

proxy_set_header X-Real-IP $remote_addr;
proxy_set_header X-Forwarded-For $proxy_add_x_forwarded_for;

to this

proxy_set_header X-Real-IP $proxy_protocol_addr;
proxy_set_header X-Forwarded-For $proxy_protocol_addr;

3. Set real_ip_header, set_real_ip_from directive

real_ip_header proxy_protocol;

set_real_ip_from xxx.xxx.xxx.xxx; # it should be your load balancer ip

4. Add the proxy_protocol parameter to the listen directive. There are around 12 listen directive in nginx.tmpl file

listen {{ $external_http_port }} {{ $default_server }};

to this

listen {{ $external_http_port }} {{ $default_server }} proxy_protocol;

5. Mount your updated nginx.tmpl file to the container

/your/nginx.tmpl:/app/nginx.tmpl

You can check sample nginx.tmpl file from this link Sample nginx.tmpl

Also you can check the nginx official documentation Documentation