IP Addresses
An IP address is an unique identifier for a computer connected to the internet or a network. It is a series of numbers separated by periods, such as 12.345.67.89, that represents a "physical" location on the internet. If you think of a domain name as what you want, then the IP address is where it is.
Each server connected to the internet has its own unique IP address that is assigned to the server by the administrator and referred to as a "static IP address". Through the use of virtual hosts a single sever can store and host numerous web site domains with this one IP address.
Each domain name will have an associated name server that is linked to a server through its IP address. When a request is made from that domain name, it will be directed by the name server to the appropriate web server that contains the files for that domain, where the request will be processed and responded back to the user client that made the request.
When referring to the current computer, as in the computer that is making the request is the same one that is receiving the request it is referred to as the local-host. It is sometimes necessary to refer to the IP address of the local-host for things such as database SQL requests when developing dynamic web pages. The default IP address that is reserved for when you are referring to the local-host is "127.0.0.1".
To make it easy to remember, a domain name is like a business name, and an IP address is like the businesses address.