Summarization is taking several networks and presenting it as 1 network.
For instance, if I had 2 networks, both networks had 250 users, so I would use a /24 (255.255.255.0) subnet mask for each network.
The networks would look like this:
If I had a routing protocol advertsing these networks a neighboring router would see both routes in his routing table.
To make efficient use of memory and CPU cycles we could summarize those.
We would summarize those 2 networks like this:
The /23 would encompass both networks, the 10.1.0.0 and the 10.1.1.0.
If I added a third network later, and i still wanted to summarize:
I would add 10.1.2.0/24
And change my summary to 10.1.0.0/22
The problem with this summary address is that it covers more than just the networks that I own.
So if there is another router that is using the 10.1.3.0 in my routing domain, I could potentially be recieving his data. As long as he is advertising a more specific route than my summary route (more specific means a longer subnet mask IE: /24 is longer than /22) then everything is ok. But if his network goes down, any traffic destined to him now gets forwarded to my router.
A summary address is a less specific route that you would use to advertise many smaller networks.
Another quick example:
Could be summarized with a 10.1.128.0/23.
In your example, since you are just using 1 network that has 4 hosts, there is no need to summarize. However if you had multiple networks containing 4 hosts, then you could summarize if they were consecutive networks.
10.1.0.0/29 will allow hosts 10.1.0.1 - 6 (6 hosts not 4).
You could then have a second network:
10.1.0.8/29 to allow hosts 10.1.0.9 - 14
You could then summarize those 2 networks with:
10.1.0.0/28 (network range of 10.1.0.0 - 10.1.0.15)
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