Squid is a web proxy -- it handles http requests for clients. It will cache recent lookups which will improve performance/reduce internet traffic, and it also gives you stronger options for restricting online activity.
A lot of people find this fiddly. First, you create an acl (access control list), then you grant/deny access. The first match wins:
Filesystem in Userspace (FUSE) is a technology that allows programs operating in userspace to be mounted in the same way as filesystems based in the kernel can be. This allows a userspace program to interface to all sorts of services, or create completely virtual filesystems through a generic interface back to the kernel. Filesystems currently available via FUSE are listed on their wiki:FUSE wiki: FileSystems.