The increasing number of hosts connected to the Internet and restrictions imposed by the Internet addressing scheme led to the idea of subnetting and supernetting. In subnetting, one large network is divided into several smaller subnetworks, and class A, B and C addresses can be subnetted.

In supernetting, several networks are combined into one large network, bringing several class C addresses to create a large range of addresses. Classes A, B and C in IP addressing are designed by two levels of hierarchy such that a portion of the address indicates a netid and a portion of address indicates a hostid on the network.

Consider an organisation with two-level hierarchical addressing. With this scheme, the organisation has one network with many hosts because all of the hosts are at the same level. Subnetting is accomplished by the further division of a network into smaller subnetworks.

When a network is subnetted, it has three portions: netid, subnetid and hostid. When the datagram arrives at a router, it knows that the first two octets (bytes) denote netid and the last two octets (bytes) define subnetid and hostid, respectively.

For example, for a 32-bit IP address of 141.14.5.23, the router uses the first two octets (141.14) as the netid, the third octet (5) as the subnetid, and the fourth octet (23) as the hostid. Thus, the routing of an IP datagram now involves three steps: delivery to the network site, delivery to the subnetwork and delivery to the host.

To accommodate the growth of address space, by 1993 the supernetting scheme had begun to take an approach that is complementary to subnet addressing. Supernetting allows addresses to assign a single organisation to span multiple classed prefixes.

A class C address cannot accommodate more than 254 hosts and a class B address has sufficient bits to make subnetting convenient. Therefore, one solution to this is supernetting. An organisation that needs 1000 addresses can be granted four class C addresses. The organisation can then use these addresses in one supernetwork.

Suppose an organisation requests a class B address and intends to subnet using the third octet as a subnet field. Instead of a single class B number, supernetting assigns the organisation a block of 256 contiguous class C numbers that the organisation can then assign to physical networks.