A DHCP server allots a dynamic IP number. The DHCP server has a group of IP addresses which can serve the purpose. It provides IP addresses to systems linked to the internet as they are connected to the network. These IP addresses are providing temporary in nature (this is why it is termed as dynamic), and this provisional period is identified as a lease. After some time the system should renew its lease, and possibly acquire a different IP address. The DHCP server confirms that no two system has a similar IP address, therefore prevents the conflict of data communication.
Generally, Windows has a built-in DHCP server which is more than required for different uses. One can allocate system’s static IP addresses, but this is typically needless stress for almost all minor networks unless the server requires to be reachable to the external network (for example the global internet rather than the organizational intranet). At times DHCP servers are built into switches, firewalls, and routers of the communication systems.
Read more info: DHCP Engineers