DHCP Relay is a device that forwards requests and replies between DHCP Server and DHCP Clients that are not located within the same subnet. These devices are generally routers that are at the edge of a network and the DHCP Relay is configured on their Layer 3 interfaces.
DHCP Relay is always configured on A Layer 3 interface on the router. Use the ip dhcp relay address command to configure an interface as a DHCP Relay. A maximum of sixteen (16) relay addresses can be configured per interface. When multiple DHCP Servers are configured, the DHCP Relay agent will broadcast to all the servers.
In the above image, the IP address 172.10.1.255 is a broadcast address. The DHCP Relay will send the DHCPDISCOVER packet to this address to discover additional DHCP Server within the network.