how does home networking work at protocol level?

I don't understand how packets are routed between individual computers on the local side of a home networking router and the outside world.

I have 2 computers connected through a router to the outside world.

On the local side of the router, their IP addresses are 192.168.0.1 and 192.168.0.2. No problem there. Each computer is unique.

But to the outside world, the IP address of both computers is the same, for example 76.90.8.95. I believe that IP address is determined by the ISP, TWC in this.

So how can each computer receive TCP and UDP messages from the outside?

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As you know, all incoming messages will have the same IP address 76.90.8.95. So, how does the router know which computer to deliver them to?

One thought.... Does the router perform some kind of port aliases?

For example, 192.168.0.1 TCP port 12345 might be translated to 76.90.8.95 TCP port 1, and 192.168.0.2 TCP port 12345 might be translated 76.90.8.95 TCP port 2.

That would seem odd. Besides the transmission delays due to the extra overhead of look-up and translation as well as monitoring outbound packets for new local TCP and UDP port numbers so a new mapping can be created, it also limits the number total number of active ports on each local computer.

Another thought.... Is there some protocol for encapsulation: embedding the local-side packet into an external packet with its own TCP and UDP header?

If so, what is the RFC number for such a protocol?

There would need to be a standard since the transport layer of every outside computer would need to know how to encapsulate outbound packets and de-encapsulate inbound packets.

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