The abbreviation DHCP stands for Dynamic Host Configuration Protocol. It is a network service that automatically assigns an IP address to each device on the network and keeps track of it so that when you connect to your home or office WiFi, the router knows what you’re using and allocates the appropriate IP address.
DHCP can assign addresses from a pool of available ones, usually in blocks of about 50 at one time. For example, if there are 50 devices connected to your WiFi at one time and all but three have already been assigned a free IP by another DHCP server elsewhere on the internet (known as assigning via “assignment”). Those last three would be given an IP from this block rather than being provided with their own individual IPs.
This means that each device will get the same IP every time, which makes identifying your household’s devices relatively straightforward. Without DHCP, you would have to manually configure a unique address for each of the 50 smartphones, tablets, and laptops connected to your router when using separate Internet service providers (ISPs) at home. This could be very difficult and error-prone if there are many mobile devices in a home where users don’t have their ISPs and can only connect their devices to a WiFi network owned by someone else.
One other important function of DHCP is to ensure that any compromised host on your network cannot be used as a gateway into your private local area network (LAN). It works like this: when a DHCP client connects to the network, it has an IP address that is valid for just a certain amount of time, after which you must renew it with the DHCP server. If you don’t do that by the allotted deadline, your Internet connection is dropped until you re-establish contact with the DHCP server again. This restriction ensures that there are no rogue devices on your network using leftover or expired IPs supplied by a compromised device that could use another compromised host on your network as a gateway out of it.