What is the necessity of IP-in-IP?

Question

There is even a standard for IP in IP encapsulation. What is the use case here? I can understand stuff like TCP over DNS, where IP might be unavailable, but if you can do IP in IP, couldn't you simply do regular IP?

Answer 1

Obvious example: Your gateway drops packets to host A, but you can send packets to host B, and host B cand send to host A. So you tunnel to B which then forwards to A. IP in IP simply allows you to tunnel in an application-independent manner, unlike application level proxies, and you preserve TTL.

Answer 2

Its a case of tunnelling. You can have two remote offices connected through a link terminating on a gateway at each end. These gateways only allow traffic from the peer gateway. A host sitting on the LAN behind the gateway cannot directly reach another host in the remote office. It needs its gateway to encapsulate the packet specifying its own IP as source, so that the peer gateway will accept it, de-capsulate it and send it to the remote host on the LAN. As Moocha said, the journey from one gateway to another would then be just considered one hop.