What is DHCP ( Dynamic Host Configuration Protocol )
DHCP is the standard protocol for assigning <IP addresses> to network devices.
Each machine in a network needs its own IP address. This address must be unique within the network, else the network or parts of it will crash. For small, internal organization networks, addresses can be assigned manually and arbitrarily as long as there are no duplicates. In larger networks, and especially in the largest of all—the Internet—assigning unique IP addresses becomes a challenge.
Network hierarchy
Unlike the human ideal, not all computers in a network are equal. Instead of connecting every computer to every computer in the world, data transfer and IP allocation are made simpler by creating hierarchal groups of computers. Thus, for example, your home computer and your neighbors' computer might be connected together to a parent router or switch, which then connects to other routes, and so on.
Network devices like routers and switches have an IP address of themselves, so that other routers can know how to call them and communicate with them. Additionally, they are the ones responsible for managing the IP addresses of all the end-user computers that connect to them. This task is performed with the DHC Protocol.
Today, most network devices integrate DHCP in order to maintain stable and efficient networking.