A bit on how routers and such allocate dynamic addresses.

DHCP

• Used for automatically assigning IP addresses to devices.
• Uses a client server architecture.

Dynamic Allocation

• Router gets a range from network admin. Each client requests an address during network initialization.
• Uses a lease concept with a controllable time period, so router can reclaim and reallocate the IP address to some other device.

Automatic Allocation

• Like dynamic, but once an IP is allotted to a MAC address it is saved for the device.
• It is preferential and not strict (ofc).

Static/Manual Allocation

• MAC address to IP mapping. May fall back to other methods if this fails.

Modus Operandi

• Uses UDP under the hood.
• Server listens on port 67, client listens on port 68.

Server discovery

• Client broadcasts a DHCPDISCOVER message on the network subnet using destination address 255.255.255.255 or using the specific subnet broadcast address.
• Client may also request for the previously offered.

Offer from the server

• IP address is reserved for the client.
• A DHCPOFFER is sent to the client.
• Information includes offered client IP, client address (the MAC Address), the subnet mask, lease period, and the Server IP.

Request from the Client

• A DHCPREQUEST message is sent to the server requesting the offered address.
• Only one offer is requested if multiple servers offer it IPs.
• Before claiming, an Address Resolution Protocol request is broadcast on the subnet. No response means there are no conflicting IPs.

Acknowledgement

• DHCPACK sent by the server.
• Includes lease duration and other requested information.
• ARP is conducted (again). If conflicting, DHCPDECLINE is sent.

Releasing

• Request to release the DHCP information and the client deactivates its IP address.
• Not mandatory as it's not known when the user would disconnect all of a sudden.