How does NAT handle TCP and UDP packets?

Network Address Translation (NAT) primarily handles TCP and UDP packets by dynamically rewriting their headers. This process is essential for allowing multiple devices on a private network to share a single public IP address. When a packet is sent from a device on a local network to the internet, NAT modifies the source address in the packet’s header to the public IP address of the NAT device. It also maintains a mapping of the private internal IP address and port number to the corresponding public IP address and port number. When an external response is received, NAT uses this mapping to rewrite the destination address in the packet headers back to the original private address and forward the packet to the appropriate device.

The reason the other options do not apply is that NAT does not ignore the headers, encrypt the data, or compress the payload. Ignoring headers would render the packets unrouteable across different networks, while encryption and payload compression do not pertain to the core function of NAT. NAT's primary role is to manage the addresses within packet headers for proper routing between internal and external networks.