What is I2P? The Invisible Internet Project is a distributed anonymizing networking project based on the same principles as Tor, but that has been designed from the ground up to be a self contained, anonymous internet application. I2P is essentially an onion web browser. What you are able to do with I2P is basically browse the internet in a totally secure way while being able to make use of all of the bandwidth and storage capacity of your machine without worrying about being tracked or harassed by others.
Many people ask what an I2P network really is, well technically speaking it is basically a network that is made via I2p which acts as the middle-man for all of the communication between yourself and other users on the I2p network. The way that this type of system works is that instead of connecting to a regular IP server like you would do with a normal computer or network card, your I2p acts as your virtual router. The way that this works is that when you browse the Internet and enter text from your I2p computer or network card, it sends that text or data to an I2p node. From that node, the message is then forwarded to the host machine where you are connected to.
This is how I2p works. Now this is one of the advantages of using I2p rather than Tor because it offers a much higher degree of protection from hacking. With Tor, you can only use the socks protocol to surf the net and with I2p you can surf the web anonymously under several sets of circumstances and with different IP addresses. This is how I2p works and the fact that most I2p routers will automatically assign an IP address to each device when it is turned on.