It’s a tricky process, but it’s used for trillions (maybe quadrillions) of data packets a day globally. Outgoing traffic is managed by the router so that incoming responses are passed back to the right computer or other hardware on the LAN. While most IP addresses have to be unique, because they’re all used in a big public pool–like having a unique street address in a unique city in a unique state or province–the NAT protocol allows for private addresses that are passed through gateway that maps the private address onto a shared public one. Network Address Translation (NAT) was created as a way to offer LAN-connected devices something special while preserving the pool of addresses available. The number of possible unique addresses was far smaller than what people predicted would be needed shortly, and that prediction came true.
When the internet first began its superfast growth over two decades ago, the addresses used came from a relatively small range, using the IP version 4 (IPv4) standard. That’s true on a LAN or within top-level internet data exchanges, whether it’s a $10 million router or an addressable smart lightbulb. Every device that communicates over the internet needs a unique internet protocol (IP) address, a number that is used by routers to package and send data to the right recipient.
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