The online racing simulator
Client-Client & Host-Client Relationships (Typical Multiplayer Game):
While it's true that the HOST can see all connections IP address, when a client connects to a host it only gets packets from that host pertaining to game state data. This is not a P2P style network, where the host tells the user that this client is now present and they should establish a connection with them to get their information (allowing them to participate).

All clients connect to the host, all game packets from the each client are sent to that host. The host them takes that data and disseminates the information gathered from all clients to all clients. Client to client communication is done with the host's say so only as it's the proxy that allows to two ends to talk to each other, it is the go between.

This allows for the host to remain in an active role throughout the process, thus allowing for an authentication system to be implemented and enforced.

I believe this system is in use, although I hear rumblings that LFS allows for direct Client to Client communications in times where the PING between users is too high when connected though the HOST. While the host is still apprised of that status of these clients, the clients are sending the game packets to the HOST and the Clients it's having an issue with.
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