Using traditional subnetting, the same number of addresses is allocated for each subnet. If all the subnets have the same requirements for the number of hosts, these fixed size address blocks would be efficient. However, most often that is not the case.

For example, the topology shown in Figure 1 requires seven subnets, one for each of the four LANs and one for each of the three WAN connections between routers. Using traditional subnetting with the given address of, 3 bits can be borrowed from the host portion in the last octet to meet the subnet requirement of seven subnets. As shown in Figure 2, borrowing 3 bits creates 8 subnets and leaves 5 host bits with 30 usable hosts per subnet. This scheme creates the needed subnets and meets the host requirement of the largest LAN.

Although this traditional subnetting meets the needs of the largest LAN and divides the address space into an adequate number of subnets, it results in significant waste of unused addresses.

For example, only two addresses are needed in each subnet for the three WAN links. Because each subnet has 30 usable addresses, there are 28 unused addresses in each of these subnets. As shown in Figure 3, this results in 84 unused addresses (28x3).

Further, this limits future growth by reducing the total number of subnets available. This inefficient use of addresses is characteristic of traditional subnetting of classful networks.

Applying a traditional subnetting scheme to this scenario is not very efficient and is wasteful. In fact, this example is a good model for showing how subnetting a subnet can be used to maximize address utilization.

Subnetting a subnet, or using Variable Length Subnet Mask (VLSM), was designed to avoid wasting addresses.