Network Address Translation (NAT) is one of the basic functions of a circuit level gateway. The simple purpose of NAT is to hide the IP addresses of a private network from the outside world.

Normally, when a router forwards a packet from one segment to another, the packet is unchanged. With NAT, as a packet crosses from a trusted segment of a circuit level gateway to an untrusted segment, the packet is rewritten so that the packet’s source address as it appears on the private segment is replaced by a translated source address. The translated source address is what the outside world sees. Thus, the private address remains hidden from the outside world.