A. DHCP stands for Dynamic Host Configuration Protocol and is used to automatically configure a host during boot up on a TCP/IP network and also to change settings while the host is attached.
This means that you can store all the available IP addresses in a central database along with information such as the subnet mask, gateways, DNS servers etc.
The basics behind DHCP is the clients are configured to use DHCP instead of being given a static IP address. When the client boots up it sends out a BOOTP request for an IP address. A DHCP server then offers an IP address that has not been assigned from its database, which is then leased to the client for a pre-defined time period.
If the DHCP client is Windows 2000 and no offer is made and IP auto configuration has not been disabled the client will attempt to find and use an IP address not currently in use otherwise TCP/IP will be disabled.