A subnetwork, or subnet, is a logically visible, distinctly addressed part of a single Internet Protocol network. The process of subnetting is the division of a computer network into groups of computers that have a common, designated IP address routing prefix.
Subnetting breaks a network into smaller realms that may use existing address space more efficiently, and, when physically separated, may prevent excessive rates of Ethernet packet collision in a larger network. The subnets may be
arranged logically in a hierarchical architecture, partitioning the organization’s network address space (see also Autonomous System) into a tree-like routing structure. Routers are used to interchange traffic between subnetworks and constitute logical or physical borders between the subnets. They manage traffic between subnets based on the high-order bit sequence (routing prefix) of the addresses.
A routing prefix is the sequence of leading (most-significant) bits of an IP address that precede the portion of the address used as host identifier and, if applicable, the set of bits that designate the subnet number. Routing prefixes are expressed in CIDR notation, which uses the first address of a network followed by the bit-length of the prefix, separated by a slash (/) character. For example, 192.168.1.0/24 is the prefix of the IPv4 network starting at the given address, having 24 bits allocated for the network number, and the rest (8 bits) reserved for host addressing. The IPv6 address specification 2001:db8::/32 is a large network for 296 hosts, having a 32-bit routing prefix.
In IPv4 networks, the routing prefix is traditionally expressed as a subnet mask, which is the prefix bit mask expressed in quad-dotted decimal representation. For example, 255.255.255.0 is the subnet mask for the 192.168.1.0/24 prefix.
All hosts within a subnet can be reached in one routing hop, implying that all hosts in a subnet are connected to the same link.
A typical subnet is a physical network served by one router, for instance an Ethernet network, possibly consisting of one or several Ethernet segments or local area networks, interconnected by network switches and network bridges) or a Virtual Local Area Network (VLAN). However, subnetting allows the network to be logically divided regardless of the physical layout of a network, since it is possible to divide a physical network into several subnets by configuring different host computers to use different routers.
While improving network performance, subnetting increases routing complexity, since each locally connected subnet must be represented by a separate entry in the routing tables of each connected router. However, by careful design of the network, routes to collections of more distant subnets within the branches of a tree-hierarchy can be aggregated by single routes. Existing subnetting functionality in routers made the introduction of Classless Inter-Domain Routing seamless.
Network addressing
Computers and devices that are participating in a network such as the Internet each have a logical address. Usually this address is unique to each device and can either be dynamically (from a network server) or statically (by an administrator) configured. An address fulfills the functions of identifying the host and locating it on the network. It allows a device to communicate with other devices connected to the network. The most common network addressing scheme is Internet Protocol version 4 (IPv4), but its successor, IPv6 is in early deployment stages. An IPv4 address consists of 32 bits, for human readability written in a form consisting of four octets separated by full stops (dots), called dot-decimal notation. An IPv6 address consists of 128 bits.
In order to facilitate routing a data packet across multiple networks, the address is divided into two parts:
• Network prefix: A contiguous group of high-order bits that are common among all hosts within a network.
• Host identifier: The remaining low-order bits of the address that are not designated in the network prefix. This part specifies a particular device in the local network.
The network prefix may be written in a form identical to that of the address itself. In IPv4, this is called the subnet mask of the address. For example, to specify the most-significant 18 bits of an address, i.e. in binary, 11111111.11111111.11000000.00000000, one writes this as 255.255.192.0.
An alternate form of specification of the routing prefix, is to simply count the number of bits in the routing prefix and append that number to the address with a slash (/) separator:
• 192.168.0.0, netmask 255.255.0.0
• 192.168.0.0/16
This latter notation is used preferentially in Classless Inter-Domain Routing and is called CIDR notation. In IPv6 this is the only acceptable form to denote routing prefixes.
Subnetting in IPv4 networks
nternet Protocol version 4 uses specially designated address formats to facilitate recognition of special address functionality. The first and the last subnets obtained by subnetting have traditionally had a special designation and, early on, special usage implications. In addition, IPv4 uses the all ones host address, i.e. the last address within a network, for broadcast transmission to all hosts on the link.
Subnetting in IPv6 networks
The design of the IPv6 address space differs significantly from IPv4. The primary reason for subnetting in IPv4 is to improve efficiency in the utilization of the relatively small address space available, particularly to enterprises. No such limitations exist in IPv6, as the address space available even to end-users is large.
An IPv6 subnet always has 64 bits in its host portion. It therefore has a /64 routing prefix (the 64 most-significant bits). Although it is technically possible to use smaller subnets, they are impractical for local area networks because stateless address autoconfiguration of network interfaces (RFC 4862) requires a /64 address. IPv6 does not implement special address formats for broadcast traffic or network numbers, and thus all addresses in a subnet are valid host addresses.
The recommended allocation for an IPv6 customer site is an address space of 80 address bits (prefix /48), but it may be as small as 72 bits (/56 allocation) for a residential customer network. This provides 65,536 subnets for a site, or a minimum of 256 subnets for a residential network. Subnetting in IPv6 is used to route traffic between the global allocation spaces and within customer network between subnets and the larger Internet. Subnetting in IPv6 is also based on the concepts of Classless Inter-Domain Routing and the standard CIDR notation is

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Great, I never knew this, thanks.