It's the same proxy_protocol keyword for both, which is why this is so confusing. In the listen line it means "remove proxy protocol from the inbound connection", as a top level directive "proxy_protocol on" on the server it means "add proxy protocol to the outbound connection"

This commit should show the difference: https://github.com/kubernetes/ingress/commit/6fa461c2a7891b4...

This is the nginx function AFAICT: https://github.com/nginx/nginx/blob/b580770f3afaeec48a15cb8c...

Looking at that though, maybe it only works with SSL passthrough... but that is the typical use-case for using proxy protocol instead of X-Forwarded-For