How 'Internet explorer's automatically detect setting' works?

Hi experts,

Can anyone explain me how internet explorer automatically detect settings option works?
[tools->options->connections->lan settings---> "Automatically detect settings"]

Thanks in advance.
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imnajamAsked:
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BarryTheobaldCommented:
This functionality is documented in the IEAK, IIRC.

When "Automatically detect settings" is ticked in IE, it tries the
following:

* If the PC is configured to do DHCP, then it will query the server. If
the response includes a string with id 252, then it uses this to
retrieve a configuration file.

* If this fails, then the PC will attempt to resolve the name wpad. It
will start in its current domain, and work back through. Eg, if the PC
is called bob.cs.anu.edu.au, it will attempt to resolve
wpad.cs.anu.edu.au, followed by wpad.anu.edu.au, etc. If this resolves
the name wpad, then IE will attempt to retrieve wpad.dat via http from
the root of the server. You should probably redirect this to the
configuration file.

* If this yields no success, then IE goes direct.

The configuration file can be either a .ins file, or a .pac file. Simon
Haddon has already commented on .pac files, in another e-mail. .ins
files are IE configuration files, which can specify all sorts of
settings, such as Outbreak Express mail servers, title bar and icons for
IE, dial-up settings, etc. Check the IEAK for more details.
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