Each TCP/IP host is identified by a logical IP address. The IP address is a network layer address and has no dependence on the Data-Link layer address (such as a MAC address of a network adapter). A unique IP address is required for each host and network component that communicates using TCP/IP.
The IP address identifies a system’s location on the network in the same way a street address identifies a house on a city block. Just as a street address must identify a unique residence, an IP address must be globally unique and have a uniform format.
Each IP address includes a network ID and a host ID.