Domain names are hostnames that allow us to remember websites more easily than using an IP address. So, for example, instead of having to remember 192.168.1.146 to come to this website, instead you can simply remember Domains.org.

Domain names are allowed to have letters, digits, and hyphens. No other characters may be used in a domain name. Domain names are also not case sensitive

Examples

The following example illustrates the difference between a URL (Uniform Resource Locator) and a domain name:

URL: http://www.domains.org/
Domain name: domains.org

In the past, domain names and server IP address were completely interchangeable. You could type in either and find the website you were looking for. Now, however, there are far more websites than there are servers, so servers now commonly use “virtual hosting” for websites. This allows multiple websites to exist on a single IP address.

For example, the server at 192.168.1.146 could handle all of the following sites:

example1.com
example2.net
example3.org

Source: domains.org

As the IP Address is getting harder and harder to get, most web hosting company doesn’t offer dedicated IP to their hosting account. So basically when you host your site with them, you are sharing your IP Address with other web site and one IP address is normally shared by hundreds or even milion sites.

Then, the question is , how does it work, how did it knows how to load my site and is there any performance issue when your site IP Address is shared between other web site?

The answer is that all the web request is handled by Web Server,and the webserver will load the your site based on the host header or virtual host name that your site is configured.

For example if the web server has 5 website and all sharing one IP, then the Network Admin has to configure host header or virtual host that is unique to your site such as www.yourdomain.com to your site.

And there is no performance benefit on using dedicated IP over shared IP. It all depends on your hosting provider bandwidth.

So what is the reason why people want dedicated IP?. The main reason is if you planning to use SSL on your site, then you need dedicated IP. If not then either static IP or shared IP doesn’t make any difference.

Source: http://www.cyberindian.com/