IP (Internet Protocol), is a standard way for computers to communicate. Generally, each computer has its own unique number. When two computers communicate, they use IP addresses to find one another. An IP Address is a set of 4 numbers between 0 and 255, each separated by a period. For example: 192.168.123.254. Even if a computer has a "name" on the network (to make it easier for you to remember), it still uses an IP address to communicate with other machines.
Messages or requests from one computer to another are broadcast, and all of the machines that are connected via an Ethernet cable can "hear" the message. The machine that is the intended recipient of the message responds, and the two machines transmit data to one another.