IP addresses are divided into 5 classes: Class A (0.0.0.0 - 127.255.255.255), Class B (128.0.0.0 - 191.255.255.255), Class C (192.0.0.0 - 223.255.255.255), Class D (224.0.0.0 - 239.255.255.255) for multicast, and Class E (240.0.0.0 - 255.255.255.255) reserved for experimental use. Classes A, B, and C are used for unicast addressing, while D and E serve special purposes.