The settings on this page are used to configure the network in your Core. The recommended configuration for a LinuxMCE Core is to have 2 network cards, and plug 1 of them into the external internet (the cable or DSL modem), and the other into the internal switch that the other computers and devices in the house connect to. This allows the LinuxMCE Core to act as a firewall to protect the devices in the house, and also to manage your network bandwidth to ensure that phone calls, video calls and other time-sensitive traffic takes priority over web pages and file downloads. In such a configuration you would enable DHCP on the internal network, and the external network would obtain an IP address either statically or through the DHCP server in your DSL/Cable modem, depending on how your internet service provider configured it.
Every device connected to the local area network in your home needs a unique IP address. The "DHCP Server" is the device that assigns every device it's own IP. If you have multiple computers in your home, you probably have a router, dsl or cable modem that is your DHCP Server. Normally you should only have 1 DHCP server on the network. If you have more than 1, they can 'fight' over the assignment of IP addresses. If you have dual network cards in the core this is not a problem since the 'external' internet connection provided by your DSL or cable modem is physically a separate network from the internal network in your home. In that case it is okay to have LinuxMCE act as the DHCP server for the internal network while the Cable/DSL modem is the DHCP server for the external network.
If you want to have diskless media directors, where they do not boot LinuxMCE from their local hard drive, but rather use the LinuxMCE Core, the Core needs to be the DHCP server for those media directors. Also, for the Core to be able to automatically configure your devices, such as telephones, the Core needs to be their DHCP server. The easiest solution is, therefore, to make the Core the sole DHCP server in your house. It will then assign IP addresses for every computer in your home, whether it's running LinuxMCE's software or not.
If you do not have dual network cards, or want to use another DHCP server, you can disable DHCP on the LinuxMCE Core altogether. Or, you can tell the Core to "give IP addresses to LinuxMCE devices only". This means the LinuxMCE Core will assign IP addresses for LinuxMCE devices, but ignore everything else in your home. If you do this, LinuxMCE can work with your other DHCP servers if they likewise do not try to assign IP addresses to your LinuxMCE devices. But this means that plug-and-play will not work since LinuxMCE will only give IP addresses to devices it already knows--not new devices.