A network address is simply a code used by computers as a means of identification. Just like getting information to and from your home requires the postal service to know the house number and street name, a network address accomplishes the same thing for a computer network. Without some way of passing along this information, the idea of the Internet would be almost useless.
Just like the postal service, a computer must know where it is sending information. The network address is a set of unique identifying sets of information that can be used to find the right destination. While many may have heard of such an identifier being used to crack identify theft schemes and other sorts of online crime, that is really just a small part of the overall importance of the address. Nearly all information will require this address.
There are a number of different ways a network address can be configured on a computer. The most common way is to use a protocol known as the Internet Protocol (IP). An address that uses this protocol may also be referred to as an IP address. The information for the IP address is contained in 32 bits. A computer will likely keep the same IP address at least while connected to the Internet, though it may also change periodically, and can be manually reset.
The other type of protocol is known as media access control (MAC). This type of network address has a little more involved simply because it uses 48 bits instead of 32. The information from a MAC number is very useful, and offers clues along the way about the origin of the computer and where it is currently located from a physical standpoint. The IP address can also offer some of these facts as well.
The network address may be used to track someone down who is wanted, but this happens very rarely. In most cases, getting the information as to the physical location of a computer is highly privileged. It will likely require some sort of warrant in order to get access to that type of information.
This ability to track the computer has led some to have security concerns about the amount of privacy a network address offers. While it may be possible for someone to learn who the Internet service provider is and even a city or town, getting any information more specific than that will be very difficult. Unless the consumer is doing something illegal, having a network address is likely nothing to worry about.