Static addressing refers to the manual assignment of IP addresses to a system. There are two main problems with this approach. Statically configuring one system with the correct address is simple, but in the course of configuring, say, a few hundred systems, mistakes are likely to be made. If the IP addresses are entered incorrectly, the system will most likely not be capable of connecting to other systems on the network. Another drawback of static addressing is reconfiguration. If the IP addressing scheme for the organization changes, each system must again be manually reconfigured. In a large organization with hundreds or thousands of systems, such a reconfiguration could take a considerable amount of time. These drawbacks to static addressing are so significant that nearly all networks use dynamic IP addressing.
Dynamic addressing refers to the assignment of IP addresses automatically. On modern networks the mechanism used to do this is the Dynamic Host Configuration Protocol (DHCP). DHCP is a protocol, part of the TCP/IP protocol suite, which enables a central system to provide client systems with IP addresses. Assigning addresses automatically with DHCP alleviates the burden of address configuration and reconfiguration that occurs with static IP addressing.
The basic function of the DHCP service is to automatically assign IP addresses to client systems. To do this, ranges of IP addresses, known as scopes, are defined on a system that is running a DHCP server application. When another system configured as a DHCP client is initialized, it asks the server for an address. If all things are as they should be, the server assigns an address to the client for a predetermined amount of time, which is known as the lease, from the scope.
A DHCP server can typically be configured to assign more than just IP addresses; they are often used to assign the subnet mask, the default gateway, and Domain Name Service (DNS) information.
Using DHCP means that administrators do not have to manually configure each client system with a TCP/IP address. This removes the common problems associated with statically assigned addresses such as human error. The potential problem of assigning duplicate IP addresses is also eliminated. DHCP also removes the need to reconfigure systems if they move from one subnet to another, or if you decide to make a wholesale change of the IP addressing structure.