- Subnets allow the most significant bits of an IP address to be interpreted as routing information, and the least significant bits of an IP address to be interpreted as a unique node address on the local IP network. The local IP network (subnet) is the network that can be addressed without using a gateway or router. Traffic between subnets must pass through a router.
- The number of bits that are interpreted as containing routing information are determined by the net mask. A bit being set in the netmask means that bit is interpreted as routing information. For example, if the IP address is 10.134.134.10 and the netmask is 255.255.0.0 then the 10.134 provides the routing information and 134.10 provides the local address information. IP addresses that start 10.134 can be sent directly to their destination on the local network. IP addresses that start with any other numbers are not on the local network so must instead be sent to the router.