NAT or Network Address Translation

At the first stages of internet there was no shortage of IP addresses. But when more and more users started using the WWW(world wide web) shortage for the IP addresses started to rise.So a new technology was introduced and it is named as NAT.
NAT is the process of modifying network address information in datagram packet headers while in transit across a traffic routing device,say router or DSL modem, for the purpose of remapping a given address space into another.In simple terms your internal network may containmany IP's but the ISP will have to provide only one IP for the entire network.This reduces the usage of IP addresses.

For Eg: If your network have 100 systems, in the absence of NAT your ISP will have to provide you with IP range ,say,200.201.202.100 to 200.201.202.200. ie, different IPs for different systems in the same network.But with NAT the ISP will provide you only one IP for the entire network and data packets reaching your router will be directed to corresponding hosts.This is done with the help of the NAT table in your router.