APIPA – Automatic Private IP Addressing
A network client fails to get an IP address using DHCP,then can discover an address on its own using APIPA(is a DHCP failover mechanism for local networks in Microsoft Windows clients can obtain IP addresses when DHCP servers are non-functional implemented in Windows 98 and later)
The entire address range 169.254.0.0/16 has been set aside for “link local” addresses.They should not be manually assigned or assigned using DHCP.
APIPA requires all devices to use the same default subnet mask of 255.255.0.0. The systems must all reside on the same network segment. APIPA cannot provide information about local routers or about DNS servers.
APIPA is intended for small business or residential network environments, usually less than 25 clients, that are not routed or connected to the Internet.
for more informations available http://support.microsoft.com/kb/220874