DHCP stands for the dynamic host configuration protocol. As we know that a unique IP address is a must for communication in LAN, WAN or internet. Assume you are given the task to assign IP addresses to the 10,000 computers in a network. How would you assign? DHCP answers this questions and it assigns the unique IP addresses to all the computers from a given range. There is an administrative control and you can block, assign, lease, renew, specify duration for the IP address and you also do the many other administrative tasks on the DHCP.
The DHCP client broadcasts a packet called a DHCPDISCOVER message that contains, at a minimum, a transaction identifier and the client's DHCP identifier, which is normally the client's physical network address. The client sends the broadcast using the address 255.255.255.255, which is a special address called the limited broadcast address. The client waits for a response from the server. If a response is not received within a specified time interval, the client retransmits the request. DHCP uses UDP as a transport protocol and, unlike RARP, does not require any special Network Access Layer protocols