Multicast is a norm implemented in all modern network hardware (switches, routers, ...). It provides an intelligent manner to send a stream to a dynamic group of machines. If you want to use multicast, make sure that all your network hardware support it.
In multicast streaming, the stream is sent to a multicast IP address (the IP addresses reserved for this purpose are from 126.96.36.199 to 188.8.131.52). Then, any machine on the network can join the multicast group by sending a request on the network, and it will automatically receive the stream. When it sends a request to leave the group, it will automatically stop receiving the stream. The advantage of multicast streaming is that only the machines that want to receive the stream actually receive it, and the streaming server only sends one stream even if there are multiple clients receiving it.
% vlc -vvv video1.xyz --sout udp:184.108.40.206 --ttl 12
where video1.xyz is the file you want to stream (remplace it with dvdold:/dev/dvd under Unix or dvdold:D: under Windows if you want to multicast a DVD), 220.127.116.11 is the multicast IP address you want to stream on and 12 is the value of the TTL (Time To Live) of your IP packets (which means that the multicast stream will be able to cross 12 routers).