|The TCP/IP model (RFC 1122)|
The Dynamic Host Configuration Protocol, is a protocol related to computers and networks of computers. It is referred to as DHCP for short. It was made so that computers could connect to other computers (on a network) automatically. To be able to access the Internet (or any computer network), an IP address is needed. DHCP allows for this IP address to be obtained automatically. Other data, like a DNS Nameserver, or a time server can also be obtained that way. Finally, computers that support it can even get a disk image they boot from over the network.
The address can be dynamic (it can change), or it can be static (it stays the same). After a certain time, the address lease has to be renewed.
DHCP is one of the most complicated IP protocols in networks of computers.