Every host on an IP based network has a unique IP address. IP addresses are 32bit addresses broken down into four 8bit segments (Example: decimal 255.255.255.255 or binary 11111111.11111111.11111111.11111111). IP addresses are broken into two parts, the network and the host segments. They are determined by the subnet mask. When hosts are communicating if the network portion of their IP addresses are the same they will communicate directly, because they are on the same network segment. If the network part of the IP addresses are different the communication must be directed through a router since the clients are on different network segments. IP addresses are broken down into five address classes. The first octet of the address determine which class the address falls in.
| Class | Network ID | Number of networks | Hosts per network | Default subnet mask |
| Class A - first octet 1-126 | First Segment | 126 | 16,581,373 | 255.0.0.0 |
| Class B - first octet 128-191 | First two segments | 16,384 | 65,024 | 255.255.0.0 |
| Class C - first octet 192-223 | first three segments | 2,097,152 | 254 | 255.255.255.0 |
| Class D- first octet 224-239 is reserved for multicasting | ||||
| Class E - first octet 240-255 Experimental not in use | ||||
Private IP addresses are special ranges are not on use on the public internet. They are reserved for use on local internal LAN environments. By not using these publicly on the internet it allows multiple companies to use them in internal network envoriments. This allows companies to use fewer public IP addresses.
10.x.x.x127.x.x.x is reserved for loopback. The IP address used for loopback is 127.0.0.1.