This document discusses subnetting and its advantages such as reducing network traffic and optimizing performance. It provides formulas for calculating the number of subnets and hosts using the number of network and host bits. Examples are given for subnetting a Class C network with 60 hosts into 4 subnets using a /26 netmask. The document also covers VLSM, which allows further subnetting of existing subnets. Finally, it discusses CIDR notation which is used by ISPs to allocate IP address blocks to customers based on their subnet mask CIDR value.