CIDR, or Classless Inter-Domain Routing, is a method used to allocate and manage IP addresses more efficiently than the older class-based system. It allows for a more flexible assignment of IP address ranges, which helps reduce the waste of addresses and improves routing efficiency on the internet. CIDR notation, such as 192.168.1.0/24, indicates the IP address and the number of bits used for the network part. By using CIDR, network administrators can create subnets that better fit their needs, leading to improved network performance and easier management. This system is crucial for the growth of the internet, as it helps accommodate the increasing number of devices and users connected to the World Wide Web.