DHCP- Dynamic Host Configuration Protocol.
this service is used to assign IP addresses to systems in a network.
If in the case of Internet your system's IP address is assigned automatically by your ISP coz u need to assign an IP address which is not in use and that is well known by your ISP using this service..
1.Check out in the Properties dailog box you can see the check box marked as Assign IP address automaticaly if you make use of Internet.
2.In the case of a local network u can assign an IP address manually.