As you are reading through a manuscript, it is helpful to see what terms have been indexed, so you can add others, catch miscellaneous errors, etc. (Speaking from bitter experience, I can say it is extremely error-prone to leave all indexing to the end of the writing, since it involves adding many TeX commands to the source files.)
So Eplain puts index terms in the margin of each page, if you
set \indexproofingtrue. It is false by default. The terms
are typeset by the macro \indexproofterm, which takes a single
argument, the term to be typeset. Eplain's definition of
\indexproofterm just puts it into an \hbox, first doing
\indexprooffont, which Eplain defines to select the font
cmtt8. With this definition long terms run off the page, but
since this is just for proofreading anyway, it seems acceptable.
On the other hand, we certainly don't want the index term to run into
the text of the page, so Eplain uses the right-hand side of the page
rather than the left-hand page (assuming a language read left to right
here). So \ifodd\pageno, Eplain kerns by \outsidemargin,
otherwise by \insidemargin. If those macros are undefined,
\indexsetmargins defines them to be one inch plus \hoffset.
To get the proofing index entries on the proper page, Eplain defines a new
insertion class \@indexproof. To unbox any index proofing
material, Eplain redefines \makeheadline to call
\indexproofunbox before the original \makeheadline. Thus,
if you have your own output routine, that redefines or doesn't use
\makeheadline, it's up to you to call \indexproofunbox at
the appropriate time.