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Routers keep routing information in a routing table, which is a special purpose database allowing the router to determine where to send a packet on its journey to another network somewhere else in the world. The way routers do this is fearsomely complex, and I can't go into it in detail here. What you need to understand is that routers come in many different sizes and degrees of power; the largest ones that shuttle packets around the various Internet backbones can be called supercomputers in their own right. Smaller routers have less built-in intelligence and can accomplish less. The very smallest routers (like the ones used in small office and home office networks) may not have a routing table at all.
Your router needs to know how to find other routers on the Internet. It can either do this directly (through information that it maintains in a routing table) or it can delegate the job to another, more powerful router. This router is typically owned by your Internet Service Provider. This larger router is the only way that packets from your network can access the Internet, because home office routers rarely maintain their own routing tables. Because it acts as a gateway to the rest of the Internet world, this larger router is called your default gateway.
Your own home network router needs to know the address of its default gateway. You may be given this address to enter manually, typically when you are given a static IP address. Much more commonly, your router receives the default gateway address when it requests a dynamic IP address from your ISP's DHCP server.
The default gateway address becomes a sort of minimal default routing table: Any packets that need to go out to the Internet are sent to the default gateway, and the default gateway (which is a router) knows how to take it from there.
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