Take a look at Figure 1 below. Think of how your broadband connection at home works. You have a cable or DSL modem that connects to your service provider and probably acts as a access point, enabling your laptop, , or PlayStation to connect simultaneously to the Internet. Your wireless is assigned a single publicly routable, globally-unique IPv4 address (D in the diagram) by your ISP, and all devices inside your house use private addresses (A, B, and C) to communicate locally.

The router translates A, B, and C to D when your devices are communicating with other computers on the Internet using NAT.

The problem for ISPs is the fact that there aren't enough globally-unique IPv4 addresses (D in the diagram) to assign to every new customer, so they are adding another layer of NAT (see Figure 2).

As you can see in the diagram, two layers of NAT are taking place for IPv4. In the first layer, the home router translates the private IPv4 addresses (A, B, and C) to an IPv4 address assigned by the ISP (D for customer 1, F for customer 2, and G for customer 3), just like in Figure 1. However, instead of D, F, and G being globally-unique, they are private addresses, and are themselves translated to E. This technology is known by multiple names, such as carrier-grade NAT (CG-NAT), large-scale NAT (LSN), or NAT444.