DHCP is Dynamic Host Configuration Protocol. It is used to control vital networking parameters of hosts (running clients) with the help of a server. DHCP is backward compatible with BOOTP. For more information see RFC 2131 (old RFC 1531) and other. (See Internet Resources section at the end of the document). You can also read DHCP FAQ (http://web.syr.edu/ jmwobus/comfaqs/dhcp.faq.html).
This mini-HOWTO covers both the DHCP _SERVER_ daemon as well as DHCP _CLIENT_ daemon. Most people need the client daemon which is used by workstations to obtain network information from a remote server. The server daemon is used by system administrators to distribute network information to clients so if you are just a regular user you need the _CLIENT_ daemon.