At the beginning, IANA gave requestors an entire class A network space thereby granting requestors 16.7 million addressesmany more than necessary. Realizing their error, they began to assign class B networksagain, providing far too many addresses for the average requestor. As the Internet grew, it quickly became clear that allocating class A and class B networks to every requestor did not make sense. Even their later action of assigning class C banks of addresses still squandered address space, as most companies didn't require 254 IP addresses. Since IANA could not revoke currently allocated address space, it became necessary to deal with the remaining space in a way that made sense. One of these ways was through the use of Classless Inter-Domain Routing (CIDR).
CIDR allows network blocks to be allocated outside of the well-defined class A/B/C ranges. In an effort to get more mileage from existing class C network blocks, CIDR allows administrators to divide their address space into smaller units, which can then be allocated as individual networks. This made it easier to give IPs to more people because space could be allocated by need, rather than by predefined size-of-space. For example, a provider with a class C subnet could choose to divide this network into 32 individual networks, and would use the network addresses and subnet masks to delineate the boundaries. A sample CIDR notation looks like this:
10.10.0.64/29
In this example, the /29 denotes the subnet mask, which means that the first 29 bits of the address are the subnet. It could also be noted as 255.255.255.248, which gives this network a total of six usable addresses.
While CIDR does deal with the problem in a quick and easy way, it doesn't actually create more IP addresses, and it does have some additional disadvantages. First, its efficiency is compromised since each allocated network requires a broadcast IP and a network address IP. So if a provider breaks a class C block into 32 separate networks, a total of 64 individual IPs are wasted on network and broadcast IPs. Second, complicated CIDR networks are more prone to configuration errors. A router with an improper subnet mask can cause an outage for small networks it serves.
Network Address Translation (NAT) provides some relief for the IP address space dilemma, and without it, we'd currently be well out of usable IP space. NAT provides a many-to-one translation, meaning that many machines can share the same IP address. This also provides some privacy and security for the machines behind the NAT device, since individually identifying them is more difficult. There are also some disadvantages to NATprimarily that some older protocols aren't designed to handle redirection.