Let me explain the difference. The best description of
it I've seen documented is in the networkers 2000 or
1999 Intro to routing presentation I believe. I can't
locate it at the moment. 

Anyway, the 'ip classless' and 'no ip classless'
global IP options modify the routers *forwarding*
decision. It is independent of routing protocols and
doesn't effect the way routing protocols work. In the
Bay world, this option is known as
Default-Route-For-Subnets-Enable in SM or classless in
BCC. It really doesn't have anything to do with
default routes however. 

With 'ip classless' on the router follows the
longest-match method.

With classful forwarding (no ip classless) if you have
a default route pointing to a 172.16.10.1 address for
example and you have a directly connected network of
172.16.20.x and 172.16.30.x all these are class B
networks to the router (172.16.0.0) because were doing
classful forwarding. 

Your routing table will look like below:

  172.16.0.0 
      172.16.20.x  directly connected
      172.16.30.x  directly connected
  0.0.0.0 ..... 172.16.30.1 (somewhere else)

So, we do a ping to 172.16.10.1 which is a network
somewhere else, what happens is the router forwards
this as 172.16.0.0 and tries to send it out its
directly connected interfaces and theres no
172.16.10.x directly connected, so it will fail and
drop the packet without even trying the default route
or other routes in the routing table. 

Turn on 'ip classless' and it will take the other
routes... see the archives for a more detailed
discussion. 



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