Windows 2000 provides Automatic Private IP Addressing (APIPA) for client computers. APIPA is a service that small networks (i.e., 25 clients or less) can use instead of the DHCP service for IP address allocation. APIPA uses a reserved range of IP addresses (169.254.x.x) to assign IP addresses on a network.
However, when you deploy APIPA on the network, the service checks regularly for the presence of a DHCP server. If APIPA detects a DHCP server on the network, APIPA yields, and the DHCP server replaces the APIPA networking addresses with dynamically assigned addresses.