Definition: DHCP stands for "Dynamic Host Configuration Protocol." It is an Internet protocol that allows the management and assignment of IP addresses on a network and fully automates the configuration of computers that use TCP/IP. The overall purpose is to reduce the work necessary to administer a large IP network.

Details: DHCP is and extension of BOOTP (Bootstrap Protocol). DHCP can be used to automatically assign IP addresses, deliver TCP/IP stack configuration parameters, and provide other configuration information such as the addresses for printer, time, and news services. DHCP offers several advantages towards administering a network including reliable configuration and the reduction of configuration management.

Sources:
http://www.dhcp-handbook.com/dhcp_faq.html#widdx
http://www.howstuffworks.com
http://dcs.jhmi.edu/standards/dhcp/dhcp.htm
http://www.dhcp.org/