Subnetting is a method for getting the most out of the limited 32-bit IP addressing space and reducing the size of the routing tables in a large internetwork. With any address class, subnetting provides a means of allocating a part of the host address space to network addresses, which lets you have more networks. The part of the host address space allocated to new network addresses is known as the subnet number.
In addition to making more efficient use of the IP address space, subnetting has several administrative benefits. Routing can become very complicated as the number of networks grows. A small organization, for example, might give each local network a class C number. As the organization grows, administering a number of different network numbers could become complicated. A better idea is to allocate a few class B network numbers to each major division in an organization. For instance, you could allocate one to Engineering, one to Operations, and so on. Then, you could divide each class B network into additional networks, using the additional network numbers gained by subnetting. This can also reduce the amount of routing information that must be communicated among routers.