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In this video, Keith Barker covers NAT, why it's necessary, and its relationship to PAT. Obviously a local network can assign addresses however it wants to, but somehow traffic headed for the Internet has to get a global address. Naturally, NAT's how it happens.
Speaking generally, an IP address isn't really anything more than a street name and a house number — useful if you're in the same area, but useless if you don't know what city, state or country the street is in. When you're on a local network, that's usually no problem — but private addresses don't work on the Internet. That's where Network Address Translation comes in.
When a host makes a request that's headed for the Internet, a router substitutes the private address for its own global address, and then when the fulfilled request comes back, the router remembers which host originated the request and untranslates the global address back to private. NAT and PAT are vital for routing and help keep the number of global addresses to a minimum.
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