Compositional problems and motion problems are visible at low resolution. Type problems and texture problems are not. That split tells you exactly what a proxy pass is for and where it stops being useful.
The economics are simple: a proxy costs a fraction of a full render, so five compositions in proxy and one full render costs a fraction of three full renders and a pick of the least bad.
The failure mode is treating a proxy as an approval. A client who signs off a proxy has approved the composition alone, and that distinction needs saying out loud before it is discovered at delivery.
What can a proxy render not tell you?
Anything about legible type, fine texture, or fine extremity detail. Those only appear at full resolution and they are where most failures live.
Should clients see proxy renders?
Often yes, for composition decisions, provided everybody understands they are approving the arrangement and not the image.