An infrared (IR) proximity sensor consists of an IR LED and a photodiode. The IR LED transmits IR light which the photodiode can pick up. With more IR light on the photodiode, it conducts better. Using a resistor in series with this photodiode, a voltage drop can be detected that is proportional to the IR light intensity that falls on the sensor.
An analogue, but also discretized value can be obtained from the sensor if you add a comparator (1 bit LM324 circuit) or AD-converter (more than 1 bit).
Common usage includes object detectors or distance measurement.