I found this pretty useful content in one of our internal DL's. I thought it should be available more widely.
The following describes what it takes to get a address lease from the DHCP client. It describes the various steps taken by the DHCP client in various circumstances.
1. The DHCP client requests an IP address by broadcasting a DHCPDiscover message to the local subnet.
2. The client is offered an address when a DHCP server responds with a DHCPOffer message containing an IP address and configuration information for lease to the client. If no DHCP server responds to the client request, the client sends DHCPDiscover messages at intervals of 0, 4, 8, 16, and 32 seconds, plus a random interval of between -1 second and 1 second. If there is no response from a DHCP server after one minute, the client can proceed in one of two ways:
If the client is using the Automatic Private IP Addressing (APIPA) alternate configuration, the client self-configures an IP address for its interface.
If the client does not support alternate configuration, such as APIPA, or if IP auto-configuration has been disabled, the client network initialization fails.
In both cases, the client begins a new cycle of DHCPDiscover messages in the background every five minutes, using the same intervals as before (0, 4, 8, 16, and 32 seconds), until it receives a DHCPOffer message from a DHCP server.
3. The client indicates acceptance of the offer by selecting the offered address and broadcasting a DHCPRequest message in response.
4. The client is assigned the address and the DHCP server broadcasts a DHCPAck message in response, finalizing the terms of the lease.
When the client receives acknowledgment, it configures its TCP/IP properties by using the DHCP option information in the reply, and completes its initialization of TCP/IP.
5. In rare cases, a DHCP server might return a negative acknowledgment to the client. This can happen if a client requests an invalid or duplicate address. If a client receives a negative acknowledgment (DHCPNack), the client must begin the entire lease process again.