Classless Inter-Domain Routing
An IP address is interpreted as composed of two parts: a network-identifying prefix followed by a host identifier within that network. In the previous classful network architecture, IP address allocations were based on the bit boundaries of the four octets of an IP address. An address was considered to be the combination of an 8, 16, or 24-bit network prefix along with a 24, 16, or 8-bit host identifier respectively. Thus, the smallest allocation and routing block contained only 256 addresses—too small for most enterprises, and the next larger block contained addresses—too large to be used efficiently even by large organizations. This led to inefficiencies in address use as well as inefficiencies in routing, because it required a large number of allocated class-C networks with individual route announcements, being geographically dispersed with little opportunity for route aggregation.
Anonymity
However, the Internet was not designed for anonymity: IP addresses serve as virtual mailing addresses, which means that any time any resource on the Internet is accessed, it is accessed from a particular IP address, and the data traffic patterns to and from IP addresses can be intercepted, monitored, and analysed, even if the content of that traffic is encrypted. This address can be mapped to a particular Internet Service Provider (ISP), and this ISP can then provide information about what customer that IP address was leased to. This does not necessarily implicate a specific individual (because other people could be using that customer's connection, especially if the customer is a public resource, such as a library), but it provides regional information and serves as powerful circumstantial evidence.