This is the process of redirecting incoming data to a different port than it was originally intended. Port Forwarding is used to protect networks and provide them with a basic level of security - If data is rerouted from its original intended IP/Port then that location will not be disclosed and cannot be found out by hackers for example.
It also works in reverse - If one single IP address is displayed on a network to the public, then the other devices within the network will be secure and their location unknown. An example of port-forwarding could be: Device A sends a request to Device B that is intended for Device D. Device C (the port-forwarding device) intercepts the request and re-sends it to Device D. Device D then responds to the request and sends it back to Device C. Device C then re-writes the request and sends it back to Device A as if it has been sent from Device B - As far as Device A is concerned, it has only ever seen Device B and has no notion of C or D.
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