Well, that's an interesting thing indeed. Let's go back from the 192.168.x.y for a while and back to the time when internet was mostly used by universities and institutes. There were unique ip addresses, like you said an "indentity". If you were the network admin of a university and though, "well, i think we should be part of the internet" then you could order some at the IANA (https://www.iana.org/). For example, a class-B-network, that means you get an address range like 34.172.0.0 to 34.172.255.255. Now you could assign them as you wished to the computers at your university and they could take part on the internet, everything was fine.
More and more people got access to the internet, for example some businesses. ISPs (internet service providers) came up. They buy a certain range of IPs and sell them to other people. Not long time ago, the common approach if you wanted your business to be connected to the internet was: "i need 20 ips for the marketing, 50 for r&d and 40 for the production, so let's order 110 ips". And this yet worked fine.
Okay, now let's say you have 4 computers at home. They create a small LocalAreaNetwork, a LAN. This is your personel network, and they are not yet connected to the internet whichs means they don't need world-wide unique addresses but local, unique addresses. There is a certain ip range for this purpose, and 192.168.x.y is commonly used for this. This means: In your own private network every pc has a local unique IP address. They now can communicate with each other, no problems. But now you'd like them to be connected to the internet. If we do it as described above, we would go to our ISP and order 4 world-wide unique IPs. Okay. But we have already our LAN and every computer there has its own local ip already. It would not be nice to change all these to world-wide ones. So there's a nice technique called "NAT", which means NetworkAddressTranslation. Every computer keeps his local ip. And in your router (which commonly also implements a NAT) you assign each local ip to a global ip in a NAT table. Now what is going on here? If PC1 with 192.168.0.101 would like to connect to google.com, it sends a request to its main gateway ("routing" is the keyword here, but i'll not explain this here) to be connected to that server. (Your router is connected to your local network with its LAN ip on the one side and to the internet with your 4 global IPs on the other side) Of course google.com is in the WAN, the internet. So the NAT now does the following: It takes the local ip and translates it to a global ip as once assinged in the NAT table. The translation could be like "192.168.0.101 <-> 33.134.10.51". So a request from 33.134.10.51 is sent to google.com. The answer comes back to 33.134.10.51 (to the NAT) and is translated back to 192.168.0.101 and thus sent to your computer. So now all your computers have local and a global IP (but this one is only stored in the NAT and used for world-wide communication).
But with more and more people getting internet access, the pool of free IPs decreased rapidely. There were too many computers for too less IPs. So what can we do? The answer is PAT (port and network translation). It works like an extended NAT. Nowadays, you go to your ISP and order one IP address, eg 90.80.70.10. You have your small LAN at home with 4 PCs. They all got their unique LAN address. Now the magic happens: Your router (with the NAT / PAT in it) is as before connected to the LAN, but to the WAN not longer with 4, but with only this one IP address.
You must know that most communication protocols nowadays use IPs and ports. A connection between a computer and a webserver over TCP ip is like the following:
PC1:12345 -> Webserver:80
Webserver:80 -> PC1:12345
PC1:12346 -> Webserver2:80
Webserver2:80 -> PC1:12346
Note that through the use of ports two different connections can be managed (PC1 is connected to webserver one with port 12345 and to webserver2 with port 12346).
So now what happens in your network? Your pc sends a request like 192.168.0.101:12345 -> google.com:80. The NAT/PAT translates this to 90.80.70.10:10001 -> google.com:80. It saves the translation (192.168.0.101:12345 <-> 90.80.70.10:10001) in its memory. The answer comes back: google.com:80 -> 90.80.70.10:10001. The NAT knows how to translate this back and the packet google.com:80 -> 192.168.0.101:12345 comes to your computer. Works fine. But the interesting thing is: You have a second computer: 192.168.0.102. With this, you also like to connect to google. The process again is 192.168.0.102:12345 -> google.com:80 which is translated by the NAT/PAT now to 90.80.70.10:10002 -> google.com:80. This translation is also saved, note that another port was used so the NAT can distinguish the answers: google.com:80 -> 90.80.70.10:10002 goes back to google.com:80 -> 192.168.0.102:12345 and to your second PC.
To conclude, with this technique you can have a huge number of PC in your local network with 192.168.x.y - they can communicate in this LAN normally - and one external global unique IP used for the outer side of your router. And all of your PCs can communicate with the internet because their requests are seperately translated to different ports on the outer router side so the answer can be tranlated back.
I hope this helped you, feel free to ask more! :) This theme is indeed very interesting!
1@Ramhound But then again, maybe those of us who already know the answer to the question don't appreciate how confusing the concept is to those who are new to it. The first few hits on Google when searching for that IP address are not particular helpful in explaining it. And I also think a lot of those who already know the answer to how it technically works should read the question not just as asking for a technical explanation but also as questioning whether it is sensible in the first place to assign the same address to many devices. – kasperd – 2015-12-16T00:06:20.413
It still isn't a well researched question... – Ramhound – 2015-12-16T00:12:44.450
@Ramhound When I typed "IP address" and went through every single page on the search results, this is the first thing that even mentioned "local" IP addresses: https://simple.wikipedia.org/wiki/IP_address. And it wasn't on the first page. Or the second.
– wizzwizz4 – 2016-07-21T15:44:05.537@wizzwizz4 - The question in my opinion still did not show very much research effort. The same Wikipedia article, you say is on the second page, is on the first page of my results. I checked Yahoo, DuckDuckGo, Bing, and Google to confirm my results. It actually is between the second and fifth result of every search engine I checked. Even if it was on the second page, that is witin the first 100 results, which I consider relevant research material Can you not, ping me, because of a 2 year old comment? – Ramhound – 2016-07-21T15:54:58.283
Oh, sorry. :-/ I thought I was still on the similar HNQ that I linked off. – wizzwizz4 – 2016-07-21T16:04:21.973
Your question is slightly confusing. You say an IP address if your identity on the internet [which is true], then go on to discuss LAN IP addresses. Do you know the difference between the two? – Matthew Williams – 2014-04-25T10:06:40.243
2https://www.grc.com/sn/past/2006.htm Episodes 25,26,27 and 42 – Jan Doggen – 2014-04-25T10:07:45.183
They are unqiue within your own intranet network There also are not enough IPv4 addresses to provide everyone their own address. – Ramhound – 2014-04-25T10:50:56.493
6@MatthewWilliams I would assume not since he is asking this question and I think it is good that he asked, only who asks can learn. – BadSnowflake – 2014-04-25T10:51:02.660
2
Maybe also interesting to read: http://superuser.com/questions/146194/why-are-home-networks-prefixed-with-192-168
– BadSnowflake – 2014-04-25T10:52:30.9603@Assylum - Honestly. This question shows very little research effort. – Ramhound – 2014-04-25T10:52:35.230
Read more on private and public IP address – pulsarjune – 2014-04-25T11:21:52.153