Counts as I always saw as being the way in which older models without rules could be used in modern 40k gameplay, such as RT Eldar Scout Robots being Counts as Rangers.
Proxying is the placement of a model for a model you do not have with you with another as an example of something normal and acceptable, a eldar player uses a spare carnifex model as his summoned demon prince or worse yet soda can.
Heavily converting third party models for use in 40k is something altogether different. i think the greatest thing about third party models is the ability to bring an alternate look to existing ranges (3rd party knight titans/Bikes/Helmets/Guns) and also for the well though out use of extra bits to modify everyday items/toys.
as an example here's a body I drudged up and used some Aliens toys wings on now, made this a bit ago completely out of spare mawlock bits/glands/etc.
Attachment 11176