http://wiki.answers.com/Q/Do_packets_that_are_sent_to_host_on_the_same_local_network_need_to_be_translated"
The localhost address is designed to verify that the software for networking has been installed and is operating correctly. It does not pass any packets to the network.
ARP
ARP
RARP
An originating host must determine if a packet should be sent directly to a host in the local network or be directed to the gateway.
ANDing is used by a router, to see if the host which has to be contacted, is on the local network of the router, or a remote network.
Local delivery
identifies the device that allows local network computers to communicate with devices on other networks Gateway describes the networking device that enables data to enter and exit a LAN, and is where the host computers forward data packets that need to exit the LAN.
the address Class
The broadcast will be received by all devices in the same network, but will not be forwarded outside the network (routers do not forward broadcast messages). So for the Internet, for example, you do not see broadcast packets.
A Default gatewayis a node (a router) on a TCP/IP Network that serves as an access pointto another network. A default gateway is used by a host when the ip'spacket destination address belongs to someplace outside the local subnet.Without a default gateway you will not be able to route packets outof your LAN
DNS stands for Domain naming system. it basicly translate ip address to host names and host names to ip address. If you use it on a local network it allows you to use your own naming conventions for your local subnet . Which helps to work easily in huge network need to remember only host names in network.