Dynamic allocation: A network administrator assigns a range of IP addresses to DHCP, and each client computer on the LAN is configured to request an IP address from the DHCP server during network initialization. The request-and-grant process uses a lease concept with a controllable time period, allowing the DHCP server to reclaim (and then reallocate) IP addresses that are not renewed.
Automatic allocation: The DHCP server permanently assigns a free IP address to a requesting client from the range defined by the administrator. This is like dynamic allocation, but the DHCP server keeps a table of past IP address assignments, so that it can preferentially assign to a client the same IP address that the client previously had.
Static allocation: The DHCP server allocates an IP address based on a table with MAC address/IP address pairs, which are manually filled in (perhaps by a network administrator). [Only requesting clients with a MAC address listed in this table will be allocated an IP address]. This feature (which is not supported by all DHCP servers) is variously called Static DHCP Asignment (by DD-WRT), fixed-address (by the dhcpd documentation), Address Reservation (by Netgear), DHCP reservation or Static DHCP (by Cisco/Linksys), and IP reservation or MAC/IP binding (by various other router manufacturers).
DHCP leases follow a similar lease “life cycle”, which generally consists of the following phases:
Allocation: A client begins with no active lease, and hence, no DHCP-assigned address. It acquires a lease through a process of allocation.
Reallocation: If a client already has an address from an existing lease, then when it reboots or starts up after being shut down, it will contact the DHCP server that granted it the lease to confirm the lease and acquire operating parameters. This is sometimes called reallocation; it is similar to the full allocation process but shorter.
Normal Operation: Once a lease is active, the client functions normally, using its assigned IP address and other parameters during the “main part” of the lease. The client is said to be bound to the lease and the address.
Renewal: After a certain portion of the lease time has expired, the client will attempt to contact the server that initially granted the lease, to renew the lease so it can keep using its IP address.
Rebinding: If renewal with the original leasing server fails (because, for example, the server has been taken offline), then the client will try to rebind to any active DHCP server, trying to extend its current lease with any server that will allow it to do so.
Release: The client may decide at any time that it no longer wishes to use the IP address it was assigned, and may terminate the lease, releasing the IP address. Like the apartment-renter moving out of the country, this may be done if a device is moving to a different network, for example. Of course, unlike DHCP servers, landlords usually don't let you cancel a lease at your leisure, but hey, no analogy is perfect.