A few notes:
- By default, failure to download the policy is silent, but the DisplayScriptDownloadFailureUI policy may be set to inform the user in the event of failure.
- PAC files may be either manually specified (Tools / Internet Options / Connections / Lan Settings / Automatic configuration script) or automatically discovered using WPAD (controlled via the “Automatically Detect Settings” checkbox on the same dialog).
- Results of the function are cached by default for performance reasons.
- Back in the Vista timeframe, the WinINET team added some new functionality to ensure that PAC files could properly work in an IPv6 environment. A summary of their changes can be found in this blog post: http://blogs.msdn.com/wndp/articles/IPV6_PAC_Extensions_v0_9.aspx
- As an aside: PAC files can have an (often unexpected) impact on Zone Determination, as I described almost 4 years ago (sheesh, time flies!).