Delivery Optimization Peer Selection and Proxy Bypass

Question

We are planning to introduce Delivery Optimization (DO) in our company. Below are the key conditions. Could you clarify the two points below?

Scenario:

Download Mode: Set to LAN (1)

DORestrictPeerSelectionBy: Set to 1 (Subnet mask) or 2(Local Peer Discovery (DNS-SD)) to restrict peer selection by subnet

Client A is on Subnet 1 on LAN1 and requests a download

Client B is on Subnet 1 on LAN1 and has the cached file

Client C is on Subnet 2 on LAN1 and has the cached file

Client D is on Subnet 1 on LAN2 and has the cached file

Network Constraints:

• All internet traffic must go through a cloud proxy

We are considering whether to allow endpoints (*.prod.do.dsp.mp.microsoft.com) on the proxy

Case:

1. LAN(1) & DORestrictPeerSelectionBy = 1 & Allow endpoints
2. LAN(1) & DORestrictPeerSelectionBy = 1 & NOT Allow endpoints
3. LAN(1) & DORestrictPeerSelectionBy = 2 & NOT Allow endpoints

My understanding:

In all cases, only Client B will be able to share its cache with Client A.

Points for Clarification:

1. If a peer restriction policy is in place, do we still need to configure a bypass for the proxy service, even though Microsoft recommends direct internet access to the endpoints?

Reference: https://learn.microsoft.com/en-us/windows/deployment/do/waas-delivery-optimization-faq#what-is-the-recommended-configuration-for-delivery-optimization-used-with-cloud-proxies

2. If we select Local Peer Discovery (DNS-SD), is it correct that we do not need to bypass the proxy service because the DO service does not return a list of peer clients (only metadata in this case)?