Hello Debabrata
If all 254 hosts try to connect at the same time, and you have only 10 IP outside addresses in your dynamic NAT pool for translation, then only 10 of the hosts will be able to successfully communicate. The NAT pool will indeed become exhausted.
The NAT operation will perform properly, but only for those 10 hosts, the rest will be unable to communicate.
Now I understand that your question focuses on the idea that 254 hosts connect “at the same time” so the question has to do with, how the NAT router deals with all these simultaneous connection attempts, right?
Well, in a network, things rarely happen simultaneously. Packets are always sent sequentially. Even if a switch receives multiple frames at the same time that are destined to the same egress port, it will queue them and send them out one at a time. In the same way, the inside port of the NAT router will always receive packets in sequential order. So even if 254 hosts try to connect to the web at EXACTLY the same time, the network will sort out those packets into a specific sequence. So the NAT router will receive them sequentially, and only the first 10 connection attempts will be translated. The 11th and above will fail. Does that make sense?
I hope this has been helpful!
Laz