TCP/IP is the protocol of choice for WANs (Wide Area Networks, a system for connecting multiple computers in different geographical locations by switched telephone network or leased data lines; by optical or other long-distance cabling; or by infrared, radio, or satellite links) and is rapidly being adopted for LANs (Local Area Networks, a system comprising multiple computers that are physically interconnected through network adapter cards and cabling).

TCP/IP, used for decades on the Internet and its predecessors, has been fine-tuned to maximize performance in extraordinarily large networks. Unlike NetBEUI, (NetBIOS Extended User Interface, the transport protocol of Microsoft Networking) which is a proprietary IBM and Microsoft protocol, TCP/IP is in the public domain. Besides, NetBEUI isn't a routable network, so its popularity is declining in comparison with TCP/IP. 

How does it work?

The TCP/IP standard makes the Internet possible. Its most important feature is that it defines a packet switching network, a method by which data can be broken up into standardized packets which are then routed to their destinations via an indeterminate number of intermediaries. Under TCP/IP, as each intermediary receives data intended for a party further away, the data are forwarded along whatever route is most convenient at the nanosecond the data arrives. It is as if rather than telephoning a friend one were to tape record a message, cut it up into equal pieces, and hand the pieces to people heading in the general direction of the intended recipient. Each time a person carrying tape met anyone going in the right direction, he or she could hand over as many pieces of tape as the recipient could comfortably carry. Eventually the message would get where it needed to go. 

Neither sender nor receiver need know or care about the route that their data takes and there is no particular reason to expect that data will follow the same route twice. (More importantly from a technical standpoint, the computers in the network can all communicate without knowing anything about the network technology carrying their messages.) Indeed, it is likely that multiple packets originating from a single long data stream will use more than one route to reach the far destination where they will be reassembled. This decentralized, anarchic, method of sending information appealed to the Internet's early sponsor, the Defense Department, which was intrigued by a communications network that could continue to function even if a major catastrophe (such as a nuclear war) destroyed a large fraction of the system. The Internet can use dedicated lines or messages can travel over ordinary telephone connections. This built-in resilience is the primary reason that any effort to censor the Internet is likely to fail. 

How does it work section by A.Michel Froomkin. 

TCP/IP is an incredibly robust and reliable protocol. It was designed to keep the Department of Defense's Advanced Research Projects Agency's network (ARPANET, the precursor to the Internet) functioning, even if many of the cities it connected had been wiped out in a nuclear war. During the early history of ARPANET, only defense contractors and university research facilities were connected. To encourage expansion of the network, commercial users were admitted; today, the vast majority of traffic on the Internet is commercial, not government-related.