kube-proxy has an option called --proxy-mode,and according to the help message, this option can be userspace or iptables.(See below)
<Userspace and iptables refer to what actually handles the connection forwarding. In both cases, local iptables rules are installed to intercept outbound TCP connections that have a destination IP address associated with a service.
In the userspace mode, the iptables rule forwards to a local port where a go binary (kube-proxy) is listening for connections. The binary (running in userspace) terminates the connection, establishes a new connection to a backend for the service, and then forwards requests to the backend and responses back to the local process. An advantage of the userspace mode is that because the connections are created from an application, if the connection is refused, the application can retry to a different backend.
In iptables mode, the iptables rules are installed to directly forward packets that are destined for a service to a backend for the service. This is more efficient than moving the packets from the kernel to kube-proxy and then back to the kernel so it results in higher throughput and better tail latency. The main downside is that it is more difficult to debug, because instead of a local binary that writes a log to /var/log/kube-proxy
you have to inspect logs from the kernel processing iptables rules.
In both cases there will be a kube-proxy binary running on your machine. In userspace mode it inserts itself as the proxy; in iptables mode it will configure iptables rather than to proxy connections itself. The same binary works in both modes, and the behavior is switched via a flag or by setting an annotation in the apiserver for the node.