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When converting Router to Switch, Why is it necessary to change this Router's IP Address

In previous related question, one key point was to disable DHCP to prevent IP address conflicts in my old unused router. I was also advised to change its IP address to be an IP outside the DHCP range of the Trendnet gateway router.

Before getting this advice, I just installed the router to see what would happen. In Figure 2 (in previous question), both XP2 & PS3 actually had internet connection through this old router and the Trendnet Router. Yet, its IP address was 192.168.1.1, whereas the Trendnet IP address was 192.168.0.1.

(But since DHCP was not disabled, there were some brief intermittent internet outages on other units; and then finally unit W7 had no connectivity until I turned off the power of the old Router.)

Why was it necessary to change the old Router's IP address to 192.168.0.y? In general, my understanding is that simple switches do not have any IP address associated with them. I ask this question because, as I said, just plugging in the old router seemed to work OK as a switch (except for the mess it caused due to not disabling DHCP).
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I guess my question wasn't really clear, so I'll try to clarify it.

The main gateway Trendnet IP address was 192.168.0.1. The DSL Router that was unused had an IP address of 192.168.1.1, and this is the IP address of my first configuration.

I was able to connect to the internet via 192.168.1.1; so now, I'm wondering why I was advised to change this to 192.168.0.y. (My understanding is that it is easiest to set y outside the range of the Trendnet DHCP range to avoid IP address conflicts.)

But my question isn't about the 4th octet, but rather the 3rd octet - namely, why change the 1 to a 0; or, in other words, why not just leave the original 192.168.1.1 IP address on the DSL unit, since it seemed to work that way? (That is, just disable DHCP, but leave the 192.168.1.1 IP address intact.)

Thanks.
If it was outside the 192.168.0 subnet then it will be transmitting packets on what is considered an internal network in a different subnet, and could be considered as off-network traffic.  Linux systems refer to these packets as martian packets.  Google that for an explanation of these packets.

Some firewalls will consider these attacks.
Ok, it seems that just disabling DHCP might have been a solution; but to avoid martian packets, the best medicine solution is recommended. That makes sense.
Thanks for the explanation.
Thanks much.