I was reading about private IP addresses and RFC 1918 at http://www.ietf.org/rfc/rfc1918.txt
The RFC clearly divides hosts within enterprises into three categories
Category 1: hosts that do not require access to hosts in other enterprises or the Internet at large; hosts within this category may use IP addresses that are unambiguous within an enterprise, but may be ambiguous between enterprises.
Category 2: hosts that need access to a limited set of outside services (e.g., E-mail, FTP, netnews, remote login) which can be handled by mediating gateways (e.g., application layer gateways). For many hosts in this category an unrestricted external access (provided via IP connectivity) may be unnecessary and even undesirable for privacy/security reasons. Just like hosts within the first category, such hosts may use IP addresses that are unambiguous within an enterprise, but may be ambiguous between enterprises.
Category 3: hosts that need network layer access outside the enterprise (provided via IP connectivity); hosts in the last category require IP addresses that are globally unambiguous.
Note: 3 categories definitions above taken from the RFC 1918 document on the IETF website
They refer to hosts in categories 1 and 2 as “private” and category 3 as “public”
The Internet Assigned Numbers Authority (IANA) has reserved the following three blocks of the IP address space for private networks:
10.0.0.0 - 10.255.255.255 (10/8 prefix)
172.16.0.0 - 172.31.255.255 (172.16/12 prefix)
192.168.0.0 - 192.168.255.255 (192.168/16 prefix)
These addresses are not routable over the internet and if any hosts assigned with these addresses need to access resources on the internet, they need a globally routable address. This can be done in many ways, one of which is Network Address Translation (NAT)
I remember the time I first came across RFC 1918. I didn’t know what it was back then and did some reading to familiarize myself.