CCNA 24

DHCP stands for Dynamic Host Configuration Protocol. It allows you to give IP addresses without manual configuration. The addresses are usually given for a limited time known as the "lease" time. DHCP can also automatically allocate static addresses for key network devices according to their MAC. DHCP server can be router-based or server-based.
To see a more detailed process in DHCP assignment, read this article.

To configure DHCP, click on Additional Tasks from the Configure tab. Next, click on DHCP and click on DHCP Pools. You'll end up here:



From here you can put in your DHCP parameters and when you're done with everything just hit the OK button. Notice that the "Import all DHCP Options into the DHCP server database" is turned on. If the router uses any interface that uses DHCP, the options that it received could be forwarded to the clients. Options include DNS server IP, etc. Anything manually typed in will override any imported configurations.

Once a client gets an IP address, you can click on the DHCP Bindings page to see the addresses leased out. Alternatively, you can type this from CLI:
show ip dhcp bind