Answer Description

Dynamic Host Configuration Protocol (DHCP) provides network devices with IP configurations. When a Windows based PC or Server does not have a statically assigned IP and cannot connect to a DHCP server it will assign an Automatic Private IP Address (APIPA) and attempt to use it to communicate on the network. The APIPA address range is 169.254.0.0 to 169.254.255.255.

Wikipedia

The Dynamic Host Configuration Protocol (DHCP) is a network management protocol used on Internet Protocol (IP) networks for automatically assigning IP addresses and other communication parameters to devices connected to the network using a client–server architecture.The technology eliminates the need for individually configuring network devices manually, and consists of two network components, a centrally installed network DHCP server and client instances of the protocol stack on each computer or device. When connected to the network, and periodically thereafter, a client requests a set of parameters from the DHCP server using the DHCP protocol. DHCP can be implemented on networks ranging in size from residential networks to large campus networks and regional ISP networks. Many routers and residential gateways have DHCP server capability. Most residential network routers receive a unique IP address within the ISP network. Within a local network, a DHCP server assigns a local IP address to each device. DHCP services exist for networks running Internet Protocol version 4 (IPv4), as well as version 6 (IPv6). The IPv6 version of the DHCP protocol is commonly called DHCPv6.