I’m still quite new to this but it is my understanding that invidious does serve as a proxy IF you are using a public instance. This is, I believe, why many instances get hit by the “sign in to confirm you’re not a bot, this helps protect our community” error due to so much traffic from the instance IP.
If you’re hosting your own instance YouTube will be able to see your IP. Since while it’s technically proxying your video requests, it’s still on your network.
I’m new to invidious and networking stuff in general so if I’m wrong please correct me.