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NAT stands for Network Address Translation.

In simple terms, its the process by which traffic on the Internet, using regular public Internet IP addresses, can travel into a private LAN, get "re-branded" with a private, internal, LAN-only IP address, and find the right host on the LAN.

One of the things that NAT allows is for several PCs on a LAN, each with a private internal IP address, share one Internet connection using a NAT-capable router (like my own WRT54GS).