One of the trickiest things about hacking is knowing what kind of anonymity tool to use, when. If what you are doing involves only the Internet (i.e. web pages and web sites), the right anonymity tool is a proxy server. “Proxy” means “stand-in” or “intermediary” (look it up; research is your specialty, right?), and a proxy server is just that: it makes your requests on your behalf, and hides your identity.
Cool, right? The thing to remember is that proxies (like TOR) only manage http(s) traffic. The instant you download and click on a .torrent file, or watch any video in any format, you’ve just jumped out of http(s), and into a different protocol that won’t be managed by your web proxy. And that’s what we really mean here: not just proxy but web proxy.
If you want to run all of your external network traffic through an anonymizing system, that would generally be a VPN, which can be a pipeline for literally everything you do outside your cable/DSL modem. But for a good discussion of when and why you should use a web proxy, check out the article linked below. It is, to a degree, an advertisement for a TOR alternative, but we all know how to filter out the advertising, right?