Recently a question was asked about the purpose of a DHCP server. I thought to answer it here in simple and layman terms.
What is DHCP?
Every device on the network has an IP address. That IP address can be assigned statically or dynamically. When you have a smaller number of devices, you go to each device and assign an IP address statically or manually say 4 or 5 devices.
When you have a larger number of devices say more than 20, you cannot go to each device and assign an IP address statically or manually. Instead, you configure a DHCP server and create a pool of IP addresses, the DHCP server assigns an IP address (also default gateway, subnet mask, IP address of DNS server, etc) when devices come online on a network.