In Internet terminology a private network is typically a network that uses private IP address space, following the RFC 1918 standard. Computers may be allocated addresses from this address space when it is necessary for them to communicate with other computing devices on an Intranet network (internal private computer network that uses the Internet Protocol).
Private networks are quite common in home and office local area network (LAN) designs, as many organizations do not see a need for globally unique IP addresses for every computer, printer and other devices that the organizations use. Private IP addresses were created due to the shortage of publicly registered IP addresses created by the IPv4 standard. One of the reasons IPv6 was created is to overcome this limitation of the IPv4 standard. However IPv6 still did not achieve a widespread use.
Routers on the Internet should be configured to discard any packets containing private IP addresses in the IP packet header. This isolation gives private networks a basic form of security as it is not usually possible for the outside world to establish a connection directly to a machine using these private addresses. As connections cannot be made between different private networks via the internet, different organizations can use the same private address range without risking address conflicts (communications accidents caused by reaching a third party using the same IP address).
If a device on a private network needs to communicate with other networks, a "mediating gateway" (in-between gateway) is needed to ensure that the outside network is presented with an address that is "real" (or publicly reachable) so that Internet routers allow the communication. This gateway is typically a NAT device or a proxy server. Public Internet Routers by default will not forward packets with RFC 1918 addresses. Unlike public Internet routers that need additional configuration to forward these packets, internal routers do not need any additional configuration to forward these packets.
This can cause problems, however, when organizations try to connect networks that both use the same private address spaces. There is a potential for clashes and routing problems if both networks use the same IP addresses for their private networks, or if both networks depend on NAT to connect them through the Internet.