The process of subnetting involves dividing a network up into smaller networks called subnets or sub networks. Each of these subnets has its own specific address. To create these additional networks we use a subnet mask. The subnet mask simply determines which portion of the IP address belongs to the host. The subnet address is created by dividing the host address into network address and host address.
The network address specifies the type of subnetwork in the network and the host address specifies the host of that subnet. Subnets are under local administration. As such, the outside world sees an organization as a single network and has no detailed knowledge of the organization’s intema1 structure. Subnetting provides the network administrator with several benefits, including extra flexibility, more efficient use of network address and the capability to contain broadcast traffic. A given .network address can be broken up into may subnetworks. For example, 172.16.1.0, 172.16.2.0, 172.16.3.0 and 172.16.4.0 are all subnets within network 171.16.0.0.
A subnet address is created by. borrowing bits from the host field and designating them as subnet field. The number of bits borrowed varies and is specified by the subnet mask. Fig. shows how bits are borrowed from the host address field to create the subnet address field. 
The subnet mask does not alter the class of the IP address; it simply “borrows” bits from the host portion and uses these to create subnets. This naturally reduces the maximum number of hosts your network can have, because you are using some of your host bits for your subnet bits.
Dinesh Thakur holds an B.C.A, MCDBA, MCSD certifications. Dinesh authors the hugely popular