http://www.networkdictionary.com/protocols/dhcp.php
Dynamic Host Configuration Protocol (DHCP) is a communications enabling network administrators manage centrally and automate the assignment of IP addresses in a network. In an IP network, each device connecting to the Internet needs a unique IP address. DHCP lets a network administrator supervise and distribute IP addresses from a central point and automatically sends a new IP address when a computer is plugged into a different place in the network.
DHCP uses the concept of a "lease" or amount of time that a given IP address will be valid for a computer. The lease time can vary depending on how long a user is likely to require the Internet connection at a particular location. It"s especially useful in education and other environments where users change frequently. Using very short leases, DHCP can dynamically reconfigure networks in which there are more computers than there are available IP addresses.
DHCP supports static addresses for computers containing Web servers that need a permanent IP address.
DHCP is an alternative to another network IP management protocol, Bootstrap Protocol (BOOTP). DHCP is a more advanced protocol, but both configuration management protocols are commonly used. Some operating systems, including Windows NT/2000, come with DHCP servers. A DHCP or BOOTP client is a program that is located in each computer so that it can be configured.