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Until recently, extending IP out to wireless industrial networks was thought to be impractical, if not impossible. Vendors embraced proprietary protocols because they presumed that IP, which is memory- and bandwidth-intensive, couldn’t be scaled down to operate on the microcontrollers and low-power wireless links used in these environments.
The release of the IETF 6LoWPAN draft standard for IPv6 communication over IEEE 802.15.4 redraws the landscape. 6LoWPAN’s potential for low-power operation makes it attractive for use in everything from handhelds to instruments, and its built-in support for AES-128 encryption offers the basis for robust authentication and security.
IEEE 802.15.4, standardized in 2004, was designed to enable the development of compact, low-power, inexpensive embedded devices, such as sensors, that can run on batteries for one to five years. IEEE 802.15.4 carries information on radio transceivers at 2.4GHz — roughly the same band as Wi-Fi but using about 1% of the power. Because this limits transmission range, collections of devices must work together to route information hop by hop over longer distances and around obstacles.
Click to see: Shrinking bulky IP headers

The charter of the IETF 6LoWPAN working group was to define how to carry IP-based communication over IEEE 802.15.4 links while conforming to open standards and assuring interoperability with other IP devices.
Doing this would eliminate the need for an array of complex gateways (one for each local 802.15.4 protocol), as well as application-specific adapters and gateway-specific security and management procedures. The utility of IP doesn’t come for free, however: Addresses and headers are large, and data transfers may be too bulky to fit in a tiny 802.15.4 packet. The technical challenge addressed by the 6LoWPAN group was to devise a means of squeezing IP headers into small packets that would carry only the bare essentials.
Their answer was a “pay as you go” header-compression method that eliminates redundant or unnecessary network-level information in the IP header, which, on reception, derives that information from related fields in the link-level 802.15.4 header.