A proposal is the application a freelancer or agency sends in reply to a job post on Upwork, made up of a bid, a cover letter and answers to any screening questions, and paid for with Connects.
A proposal has three parts. The bid is the price: an hourly rate for hourly jobs or a total, often split into milestones, for fixed-price jobs. The cover letter is the message to the client. The answers to the client's screening questions, if there are any, complete it. Upwork attaches the sender's profile, with its badges, Job Success Score and work history, so the client reads all of that alongside the letter. Submitting costs Connects, except in reply to an invitation.
For an agency, the owner or a business manager submits the proposal on a member's behalf, choosing which member's profile to attach, and the resulting contract is signed with the agency. The same person can bid on many jobs for many members from one account, which is how agencies run their sales.
A proposal is not a contract or an offer. After reading it the client may shortlist, message, interview or ignore it; a contract exists only when the client sends an offer and the freelancer accepts. Upwork tracks each proposal's status, active, interviewing, archived or withdrawn, and a proposal that goes nowhere has no effect on the Job Success Score. What it does cost is the Connects, which are rarely refunded, so the economics of proposals are about how many are sent for each contract won.
How Upwork Insights uses it
This term describes Upwork's own rules or product rather than a figure the index measures; the pages that do carry live figures are the stats and rate pages.