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Subnetting allows you to create multiple logical networks that exist within a single Class A, B, or C network. If you do not subnet, you are only able to use one network from your Class A, B, or C network, which is unrealistic.
Each data link on a network must have a unique network ID, with every node on that link being a member of the same network. If you break a major network (Class A, B, or C) into smaller subnetworks, it allows you to create a network of interconnecting subnetworks. Each data link on this network would then have a unique network/subnetwork ID. Any device, or gateway, that connects n networks/subnetworks has n distinct IP addresses, one for each network / subnetwork that it interconnects.
In order to subnet a network, extend the natural mask with some of the bits from the host ID portion of the address in order to create a subnetwork ID.
An IP address is an address used in order to uniquely identify a device on an IP network. The address is made up of 32 binary bits, which can be divisible into a network portion and host portion with the help of a subnet mask. The 32 binary bits are broken into four octets (1 octet = 8 bits). Each octet is converted to decimal and separated by a period (dot). For this reason, an IP address is said to be expressed in dotted decimal format (for example, 172.16.81.100). The value in each octet ranges from 0 to 255 decimal, or 00000000 – 11111111 binary.
Here is how binary octets convert to decimal: The right most bit, or least significant bit, of an octet holds a value of 20. The bit just to the left of that holds a value of 2^1. This continues until the left-most bit, or most significant bit, which holds a value of 2^7.