Classless Inter-Domain Routing, often referred to as CIDR, is a method for distributing and directing IP addresses. Prior to the implementation of CIDR, IP addressing relied on a Classful system, which was rigid and resulted in inefficient utilization of IP address space. CIDR introduced a new way to represent IP addresses, where an address is followed by a slash and a number, such as 192.168.0.0/24. The number that comes after the slash signifies the number of bits allocated for the network prefix, which in this example is 24. CIDR allows for more precise allocation of IP addresses, thereby reducing waste and promoting efficient routing.