Functionality of DHCP

Dynamic Host Configuration Protocol (DHCP). Used in server-based applications to allocate shared IP addresses to individual computers. When a client computer requires an IP address, a DHCP server assigns the client an IP address from a pool of shared addresses.

For example, a network may have 80 workstations, but only 54 IP addresses available. The DHCP allows the 80 workstations to share the 54 IP addresses in a way that is analogous to an office with 80 employees who share a phone system with only 54 trunk lines. In this scenario, it is expected that in normal operation no more than 54 employees will be on the phone at the same time. That is, the 55th employee and beyond will not be able to get onto the system.