A DHCP server is used to automatically give connection information to computer systems which are connecting to the network. How this works is when a system first attempts to connect to the network it will ask the server the information which is required to connect. The server will then return this information and the system will now be automatically connected to the network.
Frequently Asked Questions
When is a DHCP server useful?
You would normally run a DHCP server on a server which runs on a internal network. If your server is not connected to a network (or is not used to control a network) then a DHCP server is generally not required.