Basic DHCP on Cisco Router

Configuring DHCP IOS DHCP server

Sequence of DHCP messages :

1. Client sends a broadcast DHCPDISCOVER message to the server
2. The DHCP server replies with a DHCPOFFER message containing the IP address, subnet mask , gateway and other parameters.
3. The client sends a broadcast DHCPREQUEST message to the server, requesting the offered address.
4. The DHCP server replies with a broadcast DHCPACK packet to the client.

DHCP server was designed to work within the same broadcast domain as the clients.
If DHCP server is behind another router , that router must become a DHCP Relay Agent. The DHCP relay will intercept the broadcast DHCP messages from the client and will forward them to the server as unicast messages. See at the end of this post a setup based on this scenario.

My network setup in GNS3 shown below