They're referring to your machine's connection to your router. The router creates separate network segments, and will manage a dynamic IP with your ISP while allowing your computer to have a static IP. The static IP is useful because it allows your router to always forward ports to the same spot.
For ports, I recommend you pick a block of 10 ports somewhere between 10000 and 60000. BitTorrent is flexible with regards to port assignments, so you can basically pick whatever range you like. But the more obscure the numbers, the less likely you'll interfere with other communications. >10000 is not normally assigned, so 10000-10010 will work, but IMO is not ideal.
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