Microsoft Knowledge Base Article 237254 contains the following summary:
With the Internet Connection Sharing (ICS) feature of network and dial-up connections, you can use Windows to connect your home network or small office network to the Internet. For example, you may have a home network that connects to the Internet by using a dial-up connection. By enabling ICS on the computer that uses the dial-up connection, you are providing network address translation, addressing, and name resolution services for all computers on your home network.
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