There are many addresses that are used for special purposes. Just like the network address and broadcast address that cannot be assigned to hosts. There are many special addresses that can be allotted to hosts, but with limitations on how those hosts can interact within the network.
Loopback addresses (127.0.0.0 /8 or 127.0.0.1 to 127.255.255.254)
This network is reserved for loopback. Typically all IP addresses in the range of 127.0.0.1 – 127.255.255.255 are reserved for private use, but 127.0.0.1 is the loopback address in almost all cases. The IP address 127.0.0.1 is usually reserved for use on personal computer loopback testing. The IP addresses in this range are used by a host to direct traffic to itself. For example, it can be used on a host to test if the TCP/IP configuration is operational. Network software and utilities can use 127.0.0.1 to access a local computer’s TCP/IP network resources. Messages sent to loopback IP addresses like 127.0.0.1 do not reach outside to the local area network (LAN) but instead are automatically re-routed by the computer’s own network adapter back to the receiving end of the TCP/IP stack.
Link-Local addresses (169.254.0.0 /16 or 169.254.0.1 to 169.254.255.254)
These addresses are commonly known as the Automatic Private IP Addressing (APIPA) addresses. The Link-local addresses are used to communicate two hosts, which are there on the same link when no other IP address is specified. In other words, when the system is booting up, OS tries to configure an address on its interface through various methods like – DHCP and Manual Configuration. If OS isn’t able to configure an address on the interface through any of the automatic methods, then it configures an address on the interface from the link-local pool which is:-
254.0.0/16 – Link-local address pool in IPv4 address space
In IPv4, every interface uses to have only one address. Because of the limitation of having one address on an interface in IPv4; you may not have seen an address of range 169.254.0.0/16 on the interface.
These addresses are set aside for teaching and learning purposes. The following ranges are reserved for this purpose In RFC-5737.