In a course on differential manifolds and Lie groups, the following theorem was stated, though never proven:
Let $M$ and $N$ be smooth manifolds, and suppose $G$ is a Lie group acting on $M$. If the group action is free and proper, then $M/G$ has a manifold structure so that the quotient map $\pi:M\to M/G$ is smooth. Additionally, if $f:M/G\to N$ and $f\circ\pi$ is smooth, then $f$ is smooth.
The definition of a proper group action was given as follows: given any compact set $K \subset M$, the action of $G$ on $M$ is proper if and only if the set $\{g\in G:gK\cap K\neq\emptyset\}$ has compact closure in $G$.
I am confused about two things:
1) The definition of proper group action differs from the one I got from Wikipedia and the books I have, where the acting group is assumed to be discrete. Moreover, I found it highly contrived due to a lack of understanding on my part. What exactly is this definition helping us to see? The need for the closure to be compact, for instance, is lost on me.
2) Removing the context of manifolds and Lie groups, if one were to look at arbitrary group actions, then how would the proper action be defined? What kind of topology on G makes sense?
I apologise for any naiveté; I am new to group actions, even in the algebraic case. Thank you for your patience!