DHCP stands for "Dynamic Host Configuration Protocol". DHCP's purpose is to enable individual computers on an IP network to extract their configurations from a server (the 'DHCP server') or servers. In particular, servers that have no exact information about the individual computers until they request the information. The overall purpose of this is to reduce the work necessary to administer a large IP network. The most significant piece of information distributed in this manner is the IP address.

DHCP is based on BOOTP and maintains some backward compatibility. The main difference is that BOOTP was designed for manual pre-configuration of the host information in a server database, while DHCP allows for dynamic allocation of network addresses and configurations to newly attached hosts.
Additionally, DHCP allows for recovery and reallocation of network addresses through a leasing mechanism.

RARP is a protocol used by Sun and other vendors that allows a computer to find out its own IP number, which is one of the protocol parameters typically passed to the client system by DHCP or BOOTP. RARP doesn't support other parameters and using it, a server can only serve a single LAN. DHCP and BOOTP are designed so they can be routed.

DHCP and VLANs, which are very different in concept, are sometimes cited as different solutions to the same problem. While they have a goal in common (easing moves of networked computers), VLANs represent a more revolutionary change to a LAN than DHCP.
A DHCP server and forwarding agents can allow you to set things up so that you can unplug a client computer from one network or subnet and plug it into another and have it come alive immediately, it having been reconfigured automatically.

In conjunction to Dynamic DNS, it could automatically be given its same name in its new place. VLAN-capable LAN equipment with dynamic VLAN assignment allows you to configure things so a client computer can be plugged into any port and have the same IP number (as well as name) and be on the same subnet. The VLAN-capable network either has its own configuration that lists which MAC addresses are to belong to each VLAN, or it makes the determination from the source IP address of the IP packets that the client computer sends.

Some differences in the two approaches:

• DHCP handles changes by reconfiguring the client while a VLAN-capable network handles it by reconfiguring the network port the client is moved to.
• DHCP dynamic reconfiguration requires a DHCP server, forwarding agent in each router, and DHCP capability in each client's TCP/IP support. The analogous capability in
• DHCP can configure a new client computer for you while a VLAN-capable network can't.
• DHCP is generally aimed at giving "easy moves" capability to networks that are divided into subnets on a geographical basis, or on separate networks.

There is an issue with trying to use DHCP (or BOOTP) and VLANs at the same time, in particular, with the scheme by which the VLAN-capable network determines the client's VLAN based upon the client computer's source IP address. Doing so assumes the client computer is already configured, which precludes the use of network to get the configuration information from a DHCP or BOOTP server.

DHCP, like BOOTP runs over UDP, utilizing ports 67 and 68.