From ARIN IPv6 Wiki
What is an IP Address?
“IP” stands for Internet Protocol. Internet Protocol provides the methodology for communication between devices on the Internet. An Internet Protocol address (IP address) is a number that uniquely identifies a device on a computer network and, using transport protocols, moves information on the Internet. Every device directly connected to the Internet must have a unique IP address.
Background: IPv4 and Depletion
IPv4 (Internet Protocol version 4) is the first widely used standard defining how the Internet and its connected devices operate and communicate with one another. When IPv4 became the Internet standard, the 4.2 billion possible IP addresses were never intended to house a global commercial Internet. It was 1981, there were only a limited number of computers that needed to connect to the Internet (mostly American government and research entities), and web-capable phones were far from being invented. This pool of IP addresses has been in use for the entire history of the commercial Internet, but recent technology has driven the available IP address pool very close to depletion.
Nowadays, in addition to every computer, nearly every cellular telephone and gaming console is connected to the Internet , not to mention the infrastructure hardware required to make these devices work. As a result of this rapid growth, IPv4 addresses are running out, and fast. According to the Number Resource Organization, less than ten percent of them remained in the Internet Assigned Numbers Authority (IANA)free pool as of the beginning of 2010. Through the use of tools like Network Address Translation (NAT), users have extended the life of IPv4, because NAT allows multiple devices to speak to the Internet through a single IP address, while the router in that particular household or business keeps track of which device(s) are receiving and sending information.
The solution to IP address depletion is simple: developing a more robust numbering system will allow for far more IP addresses. IPv6 (the newer Internet Protocol) holds 340,282,366,920,938,463,463,374,607,431,768,211,456 IP addresses. This exponentially larger pool of IP addresses is the key to the future growth of the Internet, and companies that use and distribute IP addresses will need to adapt their networks and systems to use IPv6. Without IPv6,the Internet’s expansion and innovation could be limited, and the underlying infrastructure will become increasingly complex to manage. The additional costs from delaying deployment will make life harder for Internet operators, application developers, and end users everywhere.
An excellent presentation on IPv6 is available. It covers both the high-level basics, as well as in-depth technical details, especially as related to security and privacy.