An IP address is assigned to every computer on an Ethernet network. Like the street address for your home, an IP address identifies network computers. It helps traffic flow between computers because each one has its own IP address.
An IP address is formatted as a series of four values separated by periods:
192.168.0.1
Each value ranges from 0 through 255.
Each period is just a period.
For your home or office network, the IP address is most likely assigned by the router, using something called DHCP. The router keeps track of every computer’s NIC and maps an IP address to the NIC every time the computer joins the network. In the end, all computers have a unique IP address, and the world is safe for local networking.
The IP address assigned to your PC on a network is a local address. Similar IP addresses are used on the Internet to identify domains and other resources. Those are Internet IP addresses, separate from your local address.
The router is assigned an IP address by your Internet service provider (ISP). That IP address is an Internet IP address. It’s shared by all PCs on your network.
Local IP addresses start with 192.168 and 10.0.
The IP addresses discussed here are IPv4 addresses. Because the number of unique IP addresses is limited, a second standard, IPv6, has been established. The IPv6 standard allows for many more addresses, which will help accommodate future growth of the Internet.
If the router doesn’t assign an IP address, one must be configured manually.
No two computers on the network can have the same IP address.
IP is often prefixed by the acronym TCP, as in TCP/IP. The TCP part stands for Transfer Control Protocol: It’s simply a set of rules for transmitting information on a network. Technically, TCP/IP refers to the methods and engineering as opposed to a specific address or value.
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Source:http://www.dummies.com/how-to/content/what-is-an-ip-address.html
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