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The Nagle algorithm was defined in 1984 (RFC 896). It was used to optimize network performance in the case where applications sent lots of tiny packets which were then sent out to the network within a 40 byte header. So the nagle algorithm (a few lines inserted into the TCP/IP code) allowed the sender to buffer data until the buffer would hold enough information to fill a packet, thereby optimizing the number of packets sent over the network. It can usually be disabled on a stack in case it creates problems in specific situations.
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