<type name="Magento\Webapi\Controller\Soap">
    <arguments>
        <argument name="soapServer" xsi:type="object">
            Magento\Webapi\Model\Soap\Server\Proxy
        </argument>
        <argument name="errorProcessor" xsi:type="object">
            Magento\Framework\Webapi\ErrorProcessor\Proxy
        </argument>
    </arguments>
</type>

This is a type configuration.

This configuration is for the webapi_soap area. This is the area that corresponds with the SOAP Api sub-application.

This configuration tells the Object Manager that when a user wants a Magento\Webapi\Controller\Soap object that the following arguments should be used in the foo object's constructor.

• $soapServer = new Magento\Webapi\Model\Soap\Server\Proxy (...)
• $errorProcessor = new Magento\Framework\Webapi\ErrorProcessor\Proxy (...)

<preference for="Magento\Framework\App\FrontControllerInterface"
            type="Magento\Webapi\Controller\Soap"></preference>

This is a preference configuration.

This configuration is for the webapi_soap area. This is the area that corresponds with the SOAP Api sub-application.

This preference configuration tells the Object Manager when a user wants a Magento\Framework\App\FrontControllerInterface object that it should return a Magento\Webapi\Controller\Soap object.