A few months ago I set up Varnish on my Macbook Pro and have deployed it for a production site which serves anonymous and (a lot of) authenticated users. Initially, I spent a couple months just running it in my local environment, including backporting the Varnish.module to Drupal 5. In retrospect, I'm glad that I spent the time to learn how Varnish and it's configuration file works before deploying it, as it's paid off in a big way as our production site now has something which is equivalent to:
- ...an in-memory static file server for all users (e.g., the equivalent of hooking up something like nginx or lighttpd as a front end to Apache (or whatever you're using).
- ...an in-memory boost.module in terms of database-relief for anonymous users.
Contrary to popular belief the two items above are in no way an automatic benefit of simply installing Varnish. If the configuration file, and Drupal installation, is not massaged with care one definitely won't get the database relief from anonymous page caching, and the benefits from Varnish-as-a-static-file server will not nearly be optimized. Bottom line Varnish can be a temperamental piece of software. It only gives back what you put into it.
To this end, the settings in the Varnish VCL file can make or break whether you get a substantial benefit from it. Below is an example VCL file, which was formed from a good amount of research and a lot of trial and error: