What is a PAC file?
A proxy auto-configuration (PAC) file defines how a web browser can automatically choose an appropriate proxy server for fetching a given URL.
The file is based on Javascript, uses relatively simple syntax and modern browsers such as Internet Explorer, Firefox, Opera, Chrome and Safari support the PAC standard.
What is WPAD?
The Web Proxy Autodiscovery Protocol (WPAD) is a method supported by modern web browsers to locate a proxy auto-configuration (PAC) file automatically and use this to configure the browser's web proxy settings.
The protocol utilizes DHCP and/or DNS in order to locate the PAC file. Whilst WPAD is yet to become an official internet standard, support in browsers is widespread.
What exactly is the level of support?
PAC files are supported by all major browsers and can be hosted either locally on the machine or on a web server. It's possible to host a PAC file on a file share however support isn't widespread.
With the exception of Opera, the WPAD DNS method is supported by all major browsers on a correctly configured system, at this time only Internet Explorer supports the WPAD DHCP method.