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what is IP Forwarding?

Yes it is what a router does or you can have a PC acting as a router via IP Forwarding. The PC is routing between 2 networks.
 
simple explanation:
ip address so that a router gateway can forward a requested pkg between client and internet.
it usually use so for masking internal ip to the outside world
or use for sharing internet connection, where the ISP will only
provide one ip address and you have a gazillion PC.

ie:
client a trying to contact b.foo.com which has ip 24.128.45.12 (gateway ip) and it forward the request to xxx.xxx.xxx.111
client c want to contact c.foo.com which has ip 24.128.45.12 (gateway ip) it forward the request to xxx.xxx.xxx.112


I hope I'm making any sense 🙂
 
andalas, I think is correct (its a little early in the morning to think) but its also my understanding that having a router with "port forwarding" can allow you to run a web site or ftp "after" the router/firewall.
 
Yet another example:

I have a webcam behind a firewall/router. I tell my webcam server software to request data from the IP address of my router (as my pc with the webcam has an ip not on the internet, its local to my lan only) I also tell the software to request from port xyz. Now I tell my router to "forward" all requests on port xyz to my the local ip address of the pc with the webcam.

Seems simple now, but boy was it a pain when I first did it.
 
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