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An onion router works by opening a circuit of proxy servers, through which the data sent from the source to the destination can be routed. By creating a series of connections, via several proxies, neither the first nor the last server knows the whole route that the data took, nor even which source is sending to which destination.
- Onion Routing - Official U.S. Navy Web Site operated by the Center for High Assurance Computer Systems in the Information Technology Division of the US Naval Research Lab
- Tor software overview - gives an overview of onion routers
- Onion routing on Wikipedia.