How do I set up a DHCP server?

I am a networking student I need to understand how a DHCP server is set up to dynamically assign addresses in general. Furthermore, I need to know what effect limited IP addresses would have, if any, or if address translation is possible from this server. I'm not giving a specific example because I don't want to be given the solution. I just need something simpler to understand than the white papers I've been trying to understand. I doesn't need to be in laymans terms, just simpler...