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In a Class C address, the first three octets are used for the network ID, and the fourth octet is used for the host ID. With only eight bits for the host ID, each Class C network can accommodate only 254 hosts. However, with 24 network ID bits, Class C addresses allow for more than 2 million networks.

The problem with Class C networks is that they’re too small. Although few organizations need the tens of thousands of host addresses provided by a Class B address, many organizations need more than a few hundred. The large discrepancy between Class B networks and Class C networks is what led to the development of subnetting, which I describe in the next section.