DHCP stands for Dynamic Host Configuration Protocol.
DHCP server basically holds and provides every host with IP addresses or necessary configuration on the network so that the hosts can communicate. This is done automatically. This server configures the hosts on the network and without this server this configuration has to be done manually.
DHCP server can be a server or router and its advantage is that it minimizes the risk of IP conflicts. Sometimes the range of the IP addresses can be changed or new IP addresses are assigned. DHCP server can store this new information related to the configuration and transfers this information to other end points too.
