While troubleshooting an error on our zabbix server for internal items, I realized that "(not supported by proxy)" actually means that the zabbix server should not be monitored by a proxy.

I was getting the error "Invalid second parameter"

Initially I thought the data for those items could not be collected when monitoring a proxy, so it would be pointless to add those items to a zabbix proxy template.

This assumption was incorrect.

If you could update the documentation more clear here:
https://www.zabbix.com/documentation/2.2/manual/config/items/itemtypes/internal

(also all other versions)

Something like "The Zabbix Server must not be monitored by a proxy in order to get the data." or something along those lines.

I think this would clear up some confusion. In searching for a solution, I found a few forum posts that asked similar questions as to why it was returning "Invalid second parameter"