DHCP and Automatic Private IP Addressing
Windows 2000 and Windows 98 provide Automatic Private IP Addressing (APIPA), a service for assigning unique IP addresses on small office/home office (SOHO) networks without deploying the DHCP service. Intended for use with small networks with fewer than 25 clients, APIPA enables Plug and Play networking by assigning unique IP addresses to computers on private local area networks.
APIPA uses a reserved range of IP addresses (169.254. x . x ) and an algorithm to guarantee that each address used is unique to a single computer on the private network.
APIPA works seamlessly with the DHCP service. APIPA yields to the DHCP service when DHCP is deployed on a network. A DHCP server can be added to the network without requiring any APIPA-based configuration. APIPA regularly checks for the presence of a DHCP server, and upon detecting one replaces the private networking addresses with the IP addresses dynamically assigned by the DHCP server.