DHCP is an automated method by which any newly added or transferred node in a network can be assigned or reassigned an IP address instantly. Without DHCP, the network administrators would be forced to assign IP address manually for every node in a network.

A DHCP server has many duties:

1. A DHCP server is configured to manage the provision of IP addresses and is an essential requirement to run DHCP protocol. The server manages the record of all the IP addresses it allocates to the nodes. If the node rejoins or is relocated in the network, the server identifies the node using its MAC address. This helps to prevent the accidental configuration of same IP address to two different nodes.
2. For DHCP to operate, the clients need to be configured with it. When a DHCP-aware client connects to the network, the client broadcasts a request to the DHCP server for the network settings.
3. The server responds to the client’s request by providing the necessary IP configuration information.
4. The DHCP server is ideally suited in scenarios where there is a regular inclusion and exclusion of network nodes like wireless hotspots. In these cases, the DHCP server also assigns a lease time to each client, after which the assigned IP address in invalid.